I’m trying to get caught up with my reading pile which went fairly neglected in the crunch of the past few weeks. One item in that pile is this Insurance Journal article:
A ruling by the Alaska State Supreme Court requiring insurers to re-rate all policies at the very first renewal as if credit information was never considered will have the unintended result of forcing good insurance risks to pay more – to subsidize higher risk drivers and homeowners, according to the Property Casualty Insurers Association of America (PCI).[...]
Alaska law currently allows insurers to consider credit information in rating and underwriting decisions on new policies, but forbids insurers from failing to renew, or at renewal, underwriting or rating a personal insurance policy, based in whole or in part on a consumer’s credit history or insurance score.
The article continues, but the gist is that the Alaska State Supreme Court sided with the credit-unfriendly DoI in interpreting Alaska’s scoring law to mean that credit can only be used to tier or rate in the first policy term; future renewals have to assume average credit for everybody.
In such an environment, it doesn’t make sense to use credit for insurance rating or underwriting. Thus, that interpretation amounts to a backdoor ban.
I would have argued that the fact that the legislature passed the law clearly indicates that there was legislative intent to permit some use of scoring…and the interpretation supported by the Court seems to go against that clear intent.
I wonder how legislators will enjoy 2/3rds of their insurance-covered constituents getting a hike in their renewal bills as a result of the ruling.