To: FritzD@OIC.WA.GOV, CarolS@OIC.WA.GOV, jbeauchamp@satx.rr.com, mark829@hotmail.com, cej@cej-online.org

FYI - the Alaska legislature passed an anti-credit-scoring bill this session. You can find it on our BASIS system: 

Insurance Journal

Alaska Legislature Approves Bill Restricting Use of Scores
May 23, 2003


Alaska consumers could reportedly face higher insurance rates from a less competitive insurance market if a bill just sent to Gov. Frank Murkowski's (R) desk is signed into law.

The Alaska Legislature has approved legislation that restricts insurers' use of insurance scores in underwriting and rating homeowners and auto insurance policies, which will hinder insurers' ability to accurately predict risks, according to the American Insurance Association (AIA).

"Credit-based insurance scoring enables insurers to more precisely predict loss and accurately price policies," Mark Sektnan, AIA assistant vice president, western region, said. "This tool allows insurers to differentiate between lower and higher insurance risks, so customers who are less likely to file a claim pay lower rates."

The measure, SB 13, authored by Senator Kim Elton (D), reportedly bans the use of insurance scores for the renewal of existing policies unless the consumer grants a waiver and also requires insurers to submit their models to the Department of Insurance. SB 13 also restricts the inclusion of specific factors in a scoring model.

"SB 13 will make it more difficult for insurers to offer Alaska consumers competitive prices that reflect their appropriate level of risk," Sektnan said. "The Alaska Division of Insurance's study on credit scoring verifies that most people benefit from the use of credit-based insurance scoring."

The Alaska Senate approved SB 13 by a 19 - 1 vote, and the Alaska House of Representatives approved it by a vote of 31 to 7. The bill is now awaiting the signature or veto of Gov. Murkowski.

Insurance Journal

NAII Urges Lawmakers to Improve Alaska Credit Info Bill
May 16, 2003


The Alaska Senate's recent passage of legislation that would restrict
insurers' use of credit information came after lengthy negotiations among al=
l
interested parties, but still falls short of enabling insurers to effectivel=
y
use this important and fair underwriting tool, according to the National
Association of Independent Insurers (NAII).

"While the NAII believes the Senate's version of Senate Bill 13 is generally=
 
a good effort to address issues related to insurers' use of credit
information, we believe the House should amend three provisions in the
Senate-passed bill," said Sam Sorich, NAII's vice president and western
regional manager.

NAII is seeking the following three amendments:

·Eliminate a provision that would prevent an insurer from re-rating a poli=
cy
based on new credit information, which would hurt consumers who have improve=
d
their credit histories, Sorich said.

·Eliminate a provision that would prevent the use of a credit history that=
 is
more than 60 days old. The 60-day time frame is too short, and NAII fears
that this provision would make it difficult for many agents to provide
underwriting services to their customers.

·Eliminate a provision that would require insurers to develop insurance
scoring models that are unique to Alaska. NAII is concerned that this
provision would discourage insurers from entering the Alaska insurance
market.

"NAII urges the House to consider amendments to address these three importan=
t
issues," Sorich said.
 

NAII Says Alaska Study on Use of Credit Scoring is Flawed
March 6, 2003

A study commissioned by the Alaska Insurance Division on the use of credit-based insurance scoring did not find a connection between
insurance scores and income or ethnicity. Moreover, the report is riddled with shortcomings and inaccuracies, according to the National Association of Independent Insurers (NAII).

"The Alaska study provided no conclusive evidence that insurance scores are anything less than objective, accurate underwriting and rating devices benefiting most policyholders with lower premiums," said Diana Lee, senior research consultant for the NAII.

The 41-page study was conducted at the request of lawmakers and the former insurance director to review how the use of credit-based insurance scores impacts auto and homeowner consumers in Alaska. A broad, on-going review of the  insurance.