An Act Prohibiting Insurance Companies From Using Credit History As A Factor In Underwriting Or Rating Private Passenger Nonfleet Automobile Insurance Policies.
Impact
If enacted, HB 05917 would amend section 38a-686 of the Connecticut general statutes, thereby creating a more equitable insurance marketplace. This could potentially lead to lower insurance costs for many individuals who are currently penalized by their credit scores, allowing more people to access affordable auto insurance. The bill's supporters advocate for a fairer approach to insurance rating that does not disproportionately disadvantage those with poor credit histories and argues that other factors, such as driving history, should take precedence in determining insurance premiums.
Summary
House Bill 05917 proposes a significant change to how insurance companies operate in Connecticut, specifically regarding private passenger nonfleet automobile insurance policies. The bill seeks to prohibit these companies from using an applicant's or insured's credit history as a factor in the underwriting or rating processes for car insurance. This legislative move is motivated by growing concerns over the fairness of using credit history, which critics argue disproportionately affects low-income residents and individuals with limited financial history.
Contention
The discussion surrounding HB 05917 reveals notable divisions among stakeholders. Advocates for the bill, which include consumer rights groups, argue that the existing practice of factoring in credit history is unjust and leads to systemic discrimination. Conversely, some insurance industry representatives warn that removing credit history from underwriting criteria could lead to increased risk and potentially higher rates overall as companies adjust their models to accommodate such a change. This has sparked debate on how best to balance the interests of consumers with the financial viability of insurance providers.
An Act Concerning Insurance Market Conduct And Insurance Licensing, The Insurance Department's Technical Corrections And Other Revisions To The Insurance Statutes And Captive Insurance.