JUNEAU — A bill that would allow insurance companies to consider a person’s credit score when renewing a policy advanced from committee Thursday.
The Senate Labor and Commerce Committee, which sponsored SB55, was the only committee of referral for the measure on the Senate side.
Currently, insurers can consider credit history when initially issuing an auto, renter’s or homeowner’s insurance policy. According to the sponsor statement, if consumers want their credit history used as part of a renewal, they must request that.
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.
A number of insurance companies have backed the bill. They believe credit scores are an accurate predictor of risk and 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.
The director of the Alaska Division of Insurance, Bret Kolb, testified in support of the measure Thursday.
“I believe this will be good for Alaska,” Kolb said. “It will offer opportunities for insurance companies to be more competitive in their pricing.”
The bill’s opponents are concerned the proposal could lead to higher rates for Alaskans and higher premiums for lower-income families, based on credit score.
The specifics behind the score itself — and how it’s calculated — also have caused concern. Daniel Lynch of Soldotna — who told the committee he was calling in to represent “common sense” — said insurance should be connected to the risks associated with a home, car or driver, not credit score.