Bill would prohibit insurance decisions based on credit information

The Banking, Commerce and Insurance Committee heard testimony Feb. 25 on a bill that would prohibit an insurer from using credit information in connection with the issuance, underwriting, renewal, cancellation or denial of insurance.

LB92, introduced by Wilber Sen. Russ Karpisek, also would also prohibit an insurer from using an insurance score that is calculated using the income, gender, address, zip code, ethnic group, religion, marital status or nationality of the consumer as a factor.

Karpisek said using credit information to determine rates for insurance policies may further disadvantage people who are going through difficult financial times.

“I just feel that even if there are studies that can connect a credit score with a probable loss [for insurers], I don’t know if that is really the way to go about getting a rate,” he said.

Alex Hageli of the Property Casualty Insurers Association of America testified in opposition to the bill, saying almost every insurance company uses credit information to develop credit-based insurance scores.

“They are highly predictive of both the number of claims that insurers will file and the amount,” Hageli said.

Galen Ullstrom, senior vice president of Mutual of Omaha, also opposed the bill, saying it would repeal important protections for consumers found in current law. In addition, he said, access to financial information is essential in determining sufficient coverage for certain policies, such as life insurance and long-term care policies.

No one spoke in favor of the bill and the committee took no immediate action on it.