Urges and requests the Dept. of Insurance to study the practice of credit scoring
Impact
Should the Department of Insurance proceed with the requested study, the findings could lead to significant legislative changes regarding how credit scoring is utilized within the insurance sector in Louisiana. The resolution indicates that many states have already taken measures against the unregulated use of credit scores in determining insurance policies, suggesting a trend that Louisiana might follow depending on the results of the study. The resolution acknowledges existing regulations in other states that protect consumers from the potential adverse effects of credit scoring, thereby signaling a possible shift in Louisiana's regulatory approach.
Summary
HCR46, a House Concurrent Resolution, urges the Louisiana Department of Insurance to study the practice of credit scoring used by insurance companies for determining automobile and homeowner's insurance policies. The resolution highlights that a significant portion of insurance practices involves assessing an individual's credit score to evaluate risk, which consequently influences decisions regarding policy issuance, premium increases, and policy cancellation. It is noted that this practice has raised concerns among consumer advocacy groups regarding its fairness and potential discrimination against certain demographic groups.
Sentiment
The sentiment surrounding HCR46 is mixed. Supporters believe that studying the implications of credit scoring could lead to better consumer protections and fairer insurance practices, particularly for vulnerable populations who might be disproportionately affected by their credit scores. However, there are underlying tensions as some stakeholders may resist changes that could upset current industry practices. The acknowledgment of flaws in the credit reporting system by various state insurance commissioners adds weight to calls for regulation, reflecting a broader demand for transparency and fairness in insurance underwriting processes.
Contention
Notable points of contention include the debate over the accuracy and relevance of credit scoring in underwriting insurance policies. Critics argue that reliance on credit scores can unfairly disadvantage individuals from lower economic backgrounds or those with negative credit histories, irrespective of their actual ability to pay insurance premiums. The resolution’s push for a comprehensive study indicates that while there is recognition of these issues, there may be resistance from insurance companies that view credit scoring as a necessary component of risk assessment and pricing strategies.
Requests the Dept. of Insurance to study the insurance industry and information used in determining the premiums of insureds who live in the coastal parishes
Urges and requests the Dept. of Insurance to study the feasibility of prohibiting insurers from imposing more than a 2% deductible, including but not limited to a named-storm or hurricane deductible on any homeowner's insurance policy
Requests the Department of Insurance to study the issues of the availability and affordability of homeowners' insurance in coastal and intercoastal areas of the state
Requests the Louisiana Department of Insurance to study prohibiting insurers from using claims that did not exceed the insured's deductible to cancel coverage
Urges and requests the Dept. of Insurance and the La. Used Motor Vehicle Commission to jointly study whether there is a need for mandated contingent liability coverage for rental dealers and whether an adequate market for such insurance exists in this state