Motor Vehicle Insurance - Use of Credit History in Rating Policy
Impact
If enacted, HB 690 will significantly alter current insurance practices in Maryland, making it illegal for insurers to deny coverage or charge higher rates based on the credit history of applicants. This legislative change would require companies to base their premium ratings on other metrics that do not discriminate based on credit standing. This could enhance competition in the insurance market and possibly lead to lower costs for consumers who previously faced hurdles due to their credit histories. Additionally, insurers would be mandated to review and adjust premiums for policyholders who had been adversely affected by their credit history after a specified period.
Summary
House Bill 690 aims to revise the regulations surrounding motor vehicle insurance policies specifically regarding the use of credit history in premium ratings. The bill seeks to prohibit insurers from evaluating an applicant's or insured's credit history when determining rates for private passenger motor vehicle insurance. This change aligns with broader trends advocating for consumer protection against discriminatory practices that may arise from credit history considerations. The bill intends to ensure fairer access to insurance policies for all individuals, regardless of their credit status, which can disproportionately affect low-income and marginalized communities.
Contention
Opponents of HB 690 may argue that removing credit history from the rating process could lead to increased risk for insurance companies, potentially resulting in higher rates for all consumers as companies adjust to mitigate perceived financial risks. Proponents maintain that credit-based rating systems are often unfair and suggest that maintaining such practices perpetuates economic inequalities. The debate surrounding the bill illustrates divergent views on how best to balance the interests of consumers with those of businesses in the insurance sector. The forthcoming discussions in committee could illuminate additional perspectives on this contentious issue.
An Act Prohibiting Insurance Companies From Using Credit History As A Factor In Underwriting Or Rating Private Passenger Nonfleet Automobile Insurance Policies.
An Act Prohibiting Insurance Companies From Using Credit History As A Factor In Underwriting Or Rating Private Passenger Nonfleet Automobile Insurance Policies.