U.S. House Looks at Auto Insurance Rate Discrimination — PIA Reacts

Michigan Rep. Rashida Tlaib has introduced a bill in the U.S. House of Representatives to change how auto insurance companies set premium rates. If passed, and made law, the Prohibit Auto Insurance Discrimination Act (PAID) has a long list of things that insurers won’t be able to use to determine rates.

• Education
• Occupation
• Employment status
• Homeownership status
• Credit score, consumer report
• Gender
• Zip code or adjacent zip codes
• Census tract
• Marital status
• Previous insurer
• Prior purchase of insurance

“If this bill passes, it appears Representative Tlaib’s bill won’t let insurance companies use anything to determine rates,” PIA Western Alliance Executive Vice President Kim Legato told Weekly Industry News. “We don’t believe she will prevail and doubt this bill will go very far in the House because of 1945’s McCarran-Ferguson Act that gave the power to regulate insurance to the states.”

Tlaib said her constituents pay some of the highest auto premiums in the country.

“Your education level, zip code, credit score, home ownership status, job, and marital status do not determine your driving ability,” Tlaib said. “Yet auto insurance companies use these predatory and discriminatory practices when determining rates. Auto insurance discrimination continues to keep our residents in the cycle of poverty.”

Her co-sponsors are New Jersey Rep. Bonnie Watson Coleman and California’s Mark Takano.

PIA National CEO Mike Skiados said the bill clearly violates the 1945 McCarran-Ferguson Act that gave insurance regulation to the states.

“The National Association of Professional Insurance Agents (PIA) strongly supports the longstanding and successful state regulation of insurance which has benefited consumers and industry alike for over a century,” Skiados told Weekly Industry news. “The Prohibit Auto Insurance Discrimination (PAID) Act violates the authority given to states by the McCarran-Ferguson Act of 1945 to regulate most insurance issues. States have laws in place to prevent discrimination in insurance pricing, and the federal government is not the appropriate place to address an issue that has been most effectively handled at the state level.”

Legato said the items used by insurers to set rates that Tlaib wants to ban are not predatory, nor are they discriminatory.

“One of the things Representative Tlaib and her co-sponsors want to eliminate is credit scoring. We are very familiar with this issue. PIA Western Alliance lobbyists and members have successfully fought the credit score battle for years,” Legato said. “The focus has mostly been in Washington and Oregon. Washington’s last insurance commissioner, Mike Kreidler unilaterally did away with credit scoring and a lawsuit filed by the PIA stopped his illegal push. The state’s new insurance commissioner, Patty Kurderer is now arguing for a ban on credit scoring and got permission from the Legislature to do another study on the matter. What she — and others — ignores is study after study making it clear that credit scoring is a positive for consumers and actually keeps insurance rates down.”

The PIA lobbyists, with help from members, have been able to successfully stop bills banning credit scoring for the last decade.

Source link: Insurance Business America — https://bit.ly/4kJLQA6