RC Blog

House bill to ban insurers from using credit scores bites dust; up to Senate

posted by Cydney Gillis on Tuesday, February 2 at 10:53am

Opponents of using credit scores to set insurance premiums lost a battle to get House Bill 2513 out of committee this morning in the Legislature, but not before putting up a dramatic fight.

The bill, sponsored by Rep. Sharon Nelson (D-Maury Island), would have banned the use of credit scores to set insurance rates, a practice the industry says is a good predictor of risk but critics argue is discriminatory to minorities and unwarranted in tough economic times when people can’t make credit card payments due to layoffs.

The bill was set for a vote this morning in the House Committee on Financial Institutions & Insurance, but at the start of the meeting, committee members immediately went into a closed caucus. When they finished, Rep. Sharon Tomiko Santos (D-Seattle) put forward a substitute bill that, instead of prohibiting insurance credit scoring in Washington state, would have commissioned a study on the effects of the practice. The study would have been paid for by charging insurance companies a 10-cent fee on driving abstracts, or data, that insurers purchase from the state.

Before a final vote in which the bill was defeated, each committee member weighed in.

“I’m really disappointed in this, that it’s down to a study,” said Rep. John McCoy (D-Everett). For people of color, because of a practice called red-lining, he said, “there are circumstances (in which) institutions won’t make loans to these individuals, so consequently they have to do everything by cash.”

“They don’t have a credit score, they have no rating,” McCoy said, and that creates a situation of more red-lining. “They run into this every day,” he said, “and it’s quite discouraging.”

“I’m disappointed this bill is even in front of us,” said Rep. Jay Rodne (R-North Bend). “Credit scoring has been proven as a reliable acturarial assessment to determine one’s credit risk and one’s risk in general ... We have to start emphasizing personal responsibility in this Legislature.”

The companion, Senate Bill 6252, remains alive for now in the Senate, where it’s scheduled for a vote at 1:30 p.m. in the Committee on Labor and Commerce & Consumer Protection.

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Comments

Another example of the corporate elite reigning in democracy.

Neal A. Lampi | submitted on 02/02/2010, 1:14pm

Another example of someone who doesn’t understand the difference between “reigning” and “reining.”

Bob | submitted on 02/02/2010, 1:43pm

This is a travesty of justice.  If you have been laid off in a bad economy and become a credit risk…you insurance rates go up.  How ridiculous.  I agree with the “reigning” label.

Joy L | submitted on 02/04/2010, 9:38am

Why is it that when any law is proposed that would effect people based on individual choices of responsibility (in this case having a decent credit score), the first thing out of the mouth of the left is that “it discriminates against minorities?” It is called individual responsibility for a reason.  If I decide to opt-out of the “credit-card spending spree frenzy” that the rest of America has gotten itself into, why should I not benefit from a law that may lower my premiums due to my INDIVIDUAL choice of being responsible and making sure that I don’t live beyond my means and keep a decent score?

Credit Cards Suck | submitted on 03/08/2010, 11:02pm

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