INDIANAPOLIS (July 17, 2007) – Legislation prohibiting consideration of mortgage and auto loan credit inquiries in determining credit scores would make insurance underwriting less precise and harm consumers, according to the National Association of Mutual Insurance Companies (NAMIC). For that reason, NAMIC has asked New York’s governor to veto the measure.
“Enactment of A1416/S4566 would result in property/casualty insurers not being able to use certain valid and predictive information,” wrote Paul Tetrault, NAMIC’s state affairs manager for the northeast region, in a letter to Gov. Eliot Spitzer. “This would significantly hamper the underwriting process, which in turn could negatively affect consumers by increasing the cost and decreasing the availability of coverage.”
Some consumers might be unable to obtain coverage from companies that would cover them if the insurers could use the information, Tetrault said. Others would pay more than they otherwise would.
The legislation would also increase costs to consumers who would pay the ultimate price for insurers having to change their underwriting business practices.
The measure is apparently designed to prevent penalizing consumers who shop for auto and mortgage loans. But this “can be achieved in ways that would not result in such unintended negative consequences,” Tetrault wrote. “In fact, the credit-based insurance scores that insurance companies utilize commonly count multiple credit inquiries within a 30-day period as a single inquiry to account for situations in which a consumer is shopping for the best terms.”
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Posted: Tuesday, July 17, 2007 12:00:00 AM. Modified: Tuesday, July 17, 2007 2:42:55 PM.
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