Oregon: Legislation Proposed to Ban Credit Scoring & Other Insurance Tools
The issue of credit scoring and how insurers set insurance rates for auto and home continues to be under attack in Washington and Oregon. In Washington, Insurance Commissioner Mike Kreidler has stopped his efforts and will let the Legislature take the reins.
In Oregon that battle is just beginning.
The latest salvo comes from the Oregon Division of Financial Regulation. It is going to hold a hearing on a proposal the division calls LC 441. While it’s a long way from becoming law, or an insurance regulation, credit scoring is one of the items that would be banned if this proposal gets adopted.
It also does away with rating factors like sex, gender, marital status, education, occupation and housing status whether the person rents a home or owns one.
Instead, the division says, “LC 441 would create an auto insurance rating system based on safe driving behaviors such as a person’s driving record, the number of miles they drive, and the years of driving experience they have.”
Last year’s Oregon House of Representatives looked briefly at a credit scoring ban in HB 2043. The PIA Oregon opposed the bill, and with a lot of participation from the association’s membership, the bill died in committee.
Patrick O’Keefe of Cascade Insurance Center in Bend, Oregon is the chair of the PIA Oregon Government Relations Committee. He and other PIA Oregon members testified against HB 2043. O’Keefe said proposals like this — and like LC 441 — increase insurance costs for those already struggling to survive financially.
He says there are other — better — legislative proposals that would enjoy widespread support and would help consumers.
“The best idea would be updating Oregon policy to allow for the consideration of extraordinary life circumstances when adjusting rates. These extraordinary circumstances include unthinkable events like death of a spouse, loss of a job or even a pandemic,” he said. “Oregon is one of few states that doesn’t recognize extraordinary life circumstances when adjusting rates. Allowing consideration of extraordinary life circumstances is smart policy that will help Oregon consumers without the negative impacts that would accompany something like LC 441.”
Kelsey Wood of Gordon Wood Insurance and Financial Services is an active member of PIA Oregon’s government relations committee. Last year he also testified against HB 2043 and is opposed to this idea, too.
His biggest concern is credit scoring.
“Credit scoring is one of the most predictive factors of future claims,” he wrote to Weekly Industry News. “Credit Scoring is non-discriminatory.”
He favors a more accurate, efficient insurance rating system. This is especially true since more sophisticated insurance rating systems ultimately create a better overall cost system, and a more competitive industry.
“If lawmakers are opposed to use of Financial Responsibility Scoring, then why not simply make insurance companies charge the same for all?” he said. “The more lawmakers go down a path of fairness, or eliminate things ‘we don’t like,’ the more majority voters can dictate over others, such as in California, when an initiative petition removed zip code rating as a factor. The result? Rural drivers with fewer claims pay the same as metropolitan drivers. Thus rural residents subsidize those in the larger cities. That’s creating a class system where the majority living in higher risk enjoys subsidy from the minority lower risk voters.”
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