According to this article in the Union Leader, it sounds like New Hampshire may be revisiting its legislation tolerating insurers’ use of scores in insurance ratemaking.
The article begins with the story of a former AIA lobbyist who assisted in getting support for the current law. He opened a new credit card, and his insurance rates went up $112. Picking up with the Union Leader story:
n a March 8 letter to Gross, Insurance Commissioner Roger Sevigny informed him the department interprets that 1997 law “to permit an insurer to raise, or lower, the premium upon renewal of a policy where the only change in the insured’s rating criteria is in regard to credit score, so long as the insurer does not use credit scoring as the sole rating criterion.”
But that’s not what lawmakers intended, Gross contends. “I know, because I was there when that law was put through.”
Back then, he said, insurers and the insurance department assured lawmakers companies would never base their rating decisions only on credit scores.[...]
Rep. John B. Hunt, R-Rindge, was chairman of the House Commerce Committee, where SB 104 landed in 1997. Here’s how he, too, remembers the deal: “If all things being equal, the only thing that changed was your credit score, then your premium could not be increased because of that. That was the legislative intent.”
The insurance companies were willing to go along with the compromise “because there would be other ways around the issue that might have the same effect,” Hunt recalled. “In other words, there would be something else going on that they could point to rather than the credit score.”
“And so the use of the word ’solely’ was seen as wiggle room,” he said.
I’d be crossing the line I try to keep between my blogging and my real job by expressing my recollection of how New Hampshire laws and regulations were interpreted, so I’ll refrain from agreeing or disagreeing with Hunt’s or Gross’ recollections.
However, I do feel perfectly comfortable saying that my preference is that an insurer not review consumers’ scores for rating/underwriting purposes after a policy is written, except at the consumer’s request.
While refreshed scores are definitely more accurate and provide useful information about future risk, using that information has issues when it comes to consumer relations, and I think everyone’s best served by just not going there.
There are ways to soften the potential and seemingly random impact of reflecting updated credit information in the pricing of an insurance policy (e.g., specifiying a cap/floor on the rate change arising from such a shift), and it’s certainly doable. My preference is just to not go there.
(BTW, my usual disclaimer applies to the above statement. I’m expressing my own opinions here, and not those of current or former employers. Reasonable minds may disagree with my views.)