At hearings held by the House Subcommittee on Financial Institutions and Consumer Credit, representatives of the insurance industry defended the use of credit scoring in underwriting.
Dave Snyder, VP and associate general counsel for the American Insurance Association (AIA), said the use of credit-based insurance scores by property/casualty insurers was necessary to accurately assess and price risk.
“In the midst of the financial turmoil and its related chaos, the U.S. property/casualty insurance sector is stable, secure and strong,” Snyder said. “There are good reasons for this. Insurance scoring has played a major role in creating this positive market for all concerned.”
Testifying on behalf of the National Association of Insurance Commissioners, Illinois Insurance Director Michael McRaith noted that the majority of states have taken some legislative or regulatory action to address the use of credit scores and protect consumers.
"There are a variety of views on the use of credit scores, but state insurance regulators are interested in providing factual information to this public policy debate," McRaith said. "To better protect consumers, regulators are conducting a multi-state data call to collect how rates are developed, the variables involved in determining an insurance score and the weight assigned to each variable. The results of a broader multi-state survey will be compiled, evaluated and published to inform policymakers about actual consumer impacts."
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