Use of credit history by Auto Insurers could be punished mor

 

Saturday, Mar 14,2009, 4:21:22 PM   Click:

The Hartford Courant, Connecticut
Published: Friday 13 March 2009


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By Diane Levick, The Hartford Courant, Conn.

Mar. 14--HARTFORD - Auto in Connecticut, insurers would be more restricted in how they use consumer credit histories to accept or reject clients and the figure of premiums under a bill approved this week by a legislative committee.

The General Assembly of the insurance and real estate committee did not agree with a ban on insurers' use of credit information - as proposed in the original bill that Attorney General Richard Blumenthal called opposition and industry.

"We have always tried to protect the consumer in every sense and we could reach a balance, and not create a negative environment for the industry," co-chairman Senator Joseph J. Crisco, D-Woodbridge, said Friday.

Insurers have many years, lending rates, as well as factors such as driving records, where vehicles are garage (the "Territory") and how they are trained.

Bad credit often leads to higher rates. Insurance companies say the credit is a good predictor statistically the risk of claims, but Blumenthal has described as "draconian, unfair and inaccurate means of determining rates.

The bill approved Thursday, who heads the House floor, ban auto insurers to consider the credit history of someone who is affected by an extraordinary circumstance, life "in a period of three years before the application of policy.

This includes a serious chronic illness or injury or death of a spouse, child or parent, the involuntary loss of employment for more than three months, identity theft, or loss which makes the consumer's home uninhabitable.

The Insurance Department have said insurers may use credit history only to evaluate and price policies for new customers. Insurers are not allowed to use credit scoring on the renewal policy of the State, unless consumer demand and are not allowed to refuse or drop people only according to their credit.

The bill also requires that certain information by insurers, so that consumers know when and how their credit information is used.

A provision passed the original bill would have amended the current system for setting auto insurance rates by territory, leading to the city to pay much higher premiums than residents of rural and suburban. The proposal would reduce the area in the rates over time, insurers and regulators warned would be to increase rates in suburban and rural areas while reducing premiums in cities.

In another case of legislation, a bill that would have made it easier for consumers to pursue the insurance claim for unfair - and possibly collect damages most important - have died in the insurance committee, because it never came to a vote.

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