JUNEAU — Insurers would be able to consider someone’s credit score when renewing personal insurance policies under a bill in the Alaska Senate.
SB55, from the Senate Labor and Commerce Committee, was heard for the first time Tuesday. Currently, insurers can consider credit history when initially issuing a policy for things like car, renter’s or homeowner’s insurance. According to the sponsor statement, if consumers want their credit history used as part of a renewal today, they must request that.
A number of insurance companies support the measure. They say the current law results in higher premium rates and market disruptions, with consumers forced to switch carriers for rates that better reflect their risk.
Forty-seven other states allows insurance companies to look at credit history when reviewing a new policy application, but Alaska is the only one that doesn’t allow companies to consider that information when a policy is renewed, according to Kenton Brine, assistant vice president and Northwest regional manager for the Property Casualty Insurers Association of America.
“In most cases, most consumers have good enough credit that they either are not going to be affected by their credit score, or they’re going to pay less for insurance because they’re going to represent a better risk than they would if we didn’t use it,” Brine said.
Gary Strannigan, an associate vice president for public affairs at Liberty Mutual, told the committee that studies show that credit score is an accurate predictor of risk.
“From what I can surmise, people don’t partition off the responsible portions of their lives. They don’t say, ‘I’m going to be responsible with my finances but I’m going to let my roof rot,’” he said.
The Alaska Democratic party, on its Facebook page, called the measure “indefensible” and said it would allow companies charge Alaskans more for the same insurance based on credit score.
Sen. John Coghill, R-North Pole, also introduced a bill, SB 52, that would regulate insurance for consumer electronics.
“Because most electronic devices are sold through retailers who are not usually in the insurance business, and because most portable electronics insurance is sold where the devices are purchased, without regulation a chaotic market for such insurance has evolved,” Coghill said in a sponsor statement.
Both bills were held in committee.