Credit Scoring Legislation Lands in the New Mexico Legislature

The New Mexico House of Representatives is considering a bill to prohibit insurance companies from using credit scoring to underwrite, rate or renew auto, motorcycle or RV insurance policies. This bill — if passed — will go on top of regulations that say insurers cannot deny coverage based on income, gender, location, race, religion or marital status.

Supporters of House Bill 80 say this will lead to more insured drivers in New Mexico. The Insurance Information Institute (Triple I) says the state currently has the second highest uninsured driver rate in the country at 24.9%.

New Mexico is part of the PIA Western Alliance. Association Executive Vice President Kim Legato said the continued push to do an outright ban of credit scoring could seriously upset the balance of a competitive insurance marketplace.

“The PIA believes that risk classification is an important priority in property and casualty insurance,” she noted. “And we believe a healthy insurance climate means a healthy insurance agency. When companies do well, agencies do well.”

As always, the proponents of credit scoring say it disproportionately affects lower income drivers and makes auto insurance less affordable. A report from AM Best blows that stance out of the water and notes this kind of legislation leads to increased premiums for all drivers and — could — lead to insurers leaving the state.

“Risk classification is important to make sure that consumers are treated fairly — paying a rate that fairly squares up with the risks that are presented,” Legato said.

American Property and Casualty Insurance Association (APCIA) assistant vice president, Walter Gonzales agrees and said restrictions on credit scoring, and the ability of insurance to access that information, could lead to big rate increases for professionals like teachers, nurses, doctors, law enforcement and fire fighters, and others.

Source link: Insurance Business America — https://bit.ly/4gPy3p3