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Colorado’s Credit Scoring Ban Legislation is ‘Like a Bad Rash that Needs to be Permanently Cured,’ NAMIC Official Says

INDIANAPOLIS (Jan. 18, 2008) – Colorado lawmakers are faced once again with a proposed ban on credit scoring for insurance underwriting, according to the National Association of Mutual Insurance Companies (NAMIC).

HB 1143 would prohibit an insurer from using credit scoring for the acceptance, denial, renewal, or rating of a potential insured for insurance underwriting purposes in connection with property/casualty insurance. The bill was introduced in the Colorado House of Representatives and assigned to the House Business Affairs and Labor Committee.

“NAMIC is disappointed to see that a credit scoring ban bill has reared its ugly head in Colorado again,” said Christian J. Rataj, NAMIC’s Western state affairs manager. “Insurance consumers have dodged this bullet in three of the past five legislative sessions, but it keeps reappearing like a bad rash that needs to be permanently cured.”

Rataj noted that several recent federal and state government studies have validated the use of credit scoring as a legitimate and reasonable underwriting tool that does not unfairly discriminate against certain population groups. “It appears as though the advocates of a credit scoring ban just don’t want to accept the repeatedly proven fact that credit-based insurance scoring is good for the vast majority of insurance consumers in the state as it assists insurance carriers in their efforts to provide insurance consumers with rates that fairly and accurately reflect a consumer’s personal risk of loss exposure,” he said. “Insurance consumers who manage their personal finances responsibly, drive responsibly, and/or operate their businesses responsibly deserve to receive the benefit of their hard work and responsible behavior through lower insurance rates.”

Oregon voters rejected an attempt to ban the use of credit-based insurance scoring in a 2006 ballot measure by a 65 percent majority. “Insurance consumers have clearly indicated they want insurance carriers to base their insurance rates upon a thorough assessment of the consumer’s risk of loss potential, which includes the use of credit-based insurance scores,” Rataj said. “This consumer preference for comprehensive evaluations of their risk of loss potential was demonstrated by the outcome of Oregon’s Credit Scoring Ban Ballot Measure.

Banning the use of credit scoring by insurers would simply force the vast majority of insurance consumers with good credit to subsidize the rates of other consumers, Rataj said. “This is unfair and inconsistent with the public policy objective of encouraging insurance consumers to be proactive personal risk managers. HB 1143 is merely a legislative attempt to punish good insurance consumers by forcing them to pay increased insurance rates so that high-risk consumers get a better deal . . . on someone else’s dime.”

For further information, contact
Christian Rataj
State Affairs Manager - Western Region
(970) 204-6695 Tel
crataj@namic.org

Nancy Grover
Director - Media Relations
(202) 628-1558 Tel
(202) 628-1601 Fax
ngrover@namic.org

Posted: Friday, January 18, 2008 12:00:00 AM. Modified: Thursday, February 28, 2008 2:27:22 PM.

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