Lawmakers consider prohibiting use of credit score to determine insurance rates

[TexasTowelie]

Washington lawmakers are considering a bill that would prohibit insurance companies from using credit scores to determine rates or premiums for personal home and auto insurance.

During a public hearing this month, regulators, industry stakeholders and consumer advocates testified about the validity of using credit scores to determine an insurer’s risk, the implications of socio-economic inequality and the effect that quitting the practice could have on insurance customers across the state.

Senate Bill 5010’s primary sponsor, Sen. Mona Das (D-Kent), said the use of credit scores to determine the cost of insurance is “punitive” and can often have a negative impact on low-income Washingtonians and communities of color, both of which have already been disproportionately affected by the onset of the pandemic.

Das argued that being laid-off, cancelling your credit cards, or paying less on your credit bill month to month really has nothing to do with how you drive or how you care for your home — and is not a fair way for insurers to determine their risk when they open insurance policies.

Read more: https://www.seattleweekly.com/news/lawmakers-consider-prohibiting-use-of-credit-score-to-determine-insurance-rates/

[KT2000]

1. Yes!

That is such a bogus penalty. Credit scores should be banned for all except financial services. Have some bad luck? Trying to dig yourself out of debt? Of course - charge them more and make their lives even more difficult.

[Dark n Stormy Knight]

2. Good. I only recently learned that insurance companies accessed

credit scores. My first thought was how that doesn't seem fair.

But then, it also doesn't seem fair that certain companies are making money off our private financial data, especially as they do such a lousy job of protecting it from hackers.

[FBaggins]

3. They already don't use the credit score

They use an insurance score... which is also based on data from your credit report, but isn’t the same thing.

And, despite what Das argued, multiple studies over decades have shown a strong correlation between these scores and actual insured losses.

[Ron Obvious]

4. Good!

I fear any path that would lead us towards the Chinese "Social Credit Score" system and I could so easily see us finding ourselves there one day if present trends continue.