Prohibits the use of certain information in automobile insurance underwriting. (8/1/24)
The bill, if enacted, would significantly alter the framework within which automobile insurers operate, particularly outlining that insurers cannot classify risks or set rates based on the specified prohibited criteria. It would amend R.S. 22:1454(A) and repeal various existing provisions which regulate how consumer credit information is utilized in determining insurance underwriting. As a result, consumers might see changes in policies that potentially lead to more equitable insurance costs based purely on driver safety and other non-discriminatory factors.
Senate Bill 74, proposed by Senator Duplessis, seeks to amend existing laws regarding automobile insurance underwriting within Louisiana. Specifically, the bill prohibits the use of certain information in determining insurance rates, particularly targeting the practice of using credit information and related consumer data. This shift aims to protect consumers from discriminatory practices that may arise from the current underwriting standards, maintaining that classification criteria should not include factors such as education level or employment status.
The sentiment surrounding SB74 is mixed, with proponents advocating for consumer protection and fairness in insurance practices, arguing that reliance on credit information detrimentally impacts lower-income individuals or those with poor credit but good driving records. On the other hand, some industry stakeholders express concern that the removal of credit considerations may lead to increased insurance rates overall, as they believe that credit scores can indicate risk levels that affect the profitability of insurance companies.
Notable points of contention include the balancing act between consumer protection and market stability. Critics argue that removing credit information from underwriting may diminish insurers' ability to appropriately assess risk, potentially leading to higher rates for all drivers as companies adjust. Furthermore, there are concerns about the potential financial impact on the insurance market as a whole, especially with respect to how companies might respond to the loss of these currently utilized rating criteria. This raises broader questions about the efficacy and fairness of insurance underwriting methodologies.