Relating to prohibiting the use of credit scoring in certain lines of personal insurance.
Impact
The passage of HB 194 would have a profound effect on state insurance laws by banning the reliance on credit scores in personal insurance underwriting. Insurers would be required to establish new, more inclusive criteria for evaluating applicants. This change is expected to increase accessibility to insurance for many residents who either lack credit histories or possess poor credit but are otherwise responsible individuals, potentially improving their overall coverage rates. The bill is designed to protect consumers from discrimination based on credit history, which is often unrelated to an individual's actual risk level.
Summary
House Bill 194 addresses the use of credit scoring in personal insurance by prohibiting insurers from using credit information as a factor in underwriting or rating policies. The legislation aims to level the playing field for individuals who may not have robust credit histories, ensuring that insurance decisions are based on more equitable criteria. This bill specifically targets lines of personal insurance, highlighting a significant shift in how insurers can assess risk, moving away from credit-based metrics.
Sentiment
General sentiment around HB 194 appears to be supportive among consumer advocacy groups, who argue that credit scoring can unfairly penalize individuals for circumstances beyond their control, such as economic downturns or personal hardships. Insurers, however, have expressed concerns about the implications of this change, fearing it could lead to increased risk and subsequently higher premiums overall. The debate centers on the balance between consumer protection and the viability of insurers in managing risk effectively.
Contention
Notable points of contention have emerged regarding the potential adverse effects of restricting insurers' ability to use credit information. Opponents of the bill warn that this could lead to higher premiums across the board as insurers look to mitigate their risk in other ways. Supporting parties emphasize the need for fairness and inclusivity in insurance practices, arguing that credit scores do not always accurately reflect an individual's capability to manage risk.
Relating to prohibiting the use of certain credit scores, including environmental, social, or governance scores and social credit scores, by certain financial institutions and other lenders in this state; providing a civil penalty.
Relating to consideration by insurers of certain prohibited criteria for ratemaking and coverage decisions and the use of disparate impact analysis regarding certain insurance practices.
Relating to the prohibition of certain discrimination based on sexual orientation or gender identity or expression; providing an administrative penalty.
Relating to prohibitions on the illegal entry into or illegal presence in this state by a person who is an alien, the enforcement of those prohibitions and certain related orders, including immunity from liability and indemnification for enforcement actions, and authorizing or requiring under certain circumstances the removal of persons who violate those prohibitions; creating criminal offenses.