Legislature passes insurance bill amid warnings of higher costs for the elderly, poor

House Bill 195 will allow insurance companies to take credit scores into account when setting rates

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The Alaska Legislature has approved a measure that minority Senate Democrats say will result in higher auto insurance costs for rural Alaskans, racial minorities, the elderly, and the poor.

 

In a 13-4 vote Thursday, the Alaska Senate approved House Bill 195, which allows companies to take credit scores into account when renewing insurance policies. Backers of the proposal say when it is signed into law, it will mean lower costs for people with good credit history.

The House has already approved the measure with a bipartisan 39-0 vote, and it now goes to the desk of the man who introduced it, Gov. Bill Walker. The governor vetoed a previous version of the bill last year “due to the lack of adequate protections for Alaskan consumers.” After his veto, he introduced HB 195 as a substitute.

Alaska law already allows insurance companies to consider credit scores when signing new policies. Those companies aren’t allowed to take it into account when a policy is renewed, though an insurance customer can ask the company to do so.

HB 195 was backed by Alaska USA Federal Credit Union, State Farm Insurance, the American Insurance Association, the National Association of Mutual Insurance Companies, and the Property Casualty Insurers of America, all of which submitted letters of support for the bill.

Under the bill, if an insurance company penalizes an Alaskan for his or her credit history, that person can ask for an exemption for an “extraordinary life circumstance,” a category that includes the loss of a job or a severe injury. That exemption may be granted by the director of the state division of insurance.

On Thursday, Sen. Bill Wielechowski, D-Anchorage, led opposition to the measure, saying that because credit scoring systems are biased, this system will unfairly penalize many Alaskans.

“The limited data do suggest that unequal effects do exist on consumers with varying economic and ethnic characteristics,” he said, referencing a state report from 2003.

That report went on to conclude, “In the aggregate, consumers that reside in higher income/high percentage Caucasian zip codes may be less impacted by the use of the consumer’s credit history.”

The 15-year-old document was produced shortly before the Legislature voted to ban the use of credit scores for insurance renewals, the act that will be reversed if Walker signs HB 195 into law.

Wielechowski offered two amendments on the bill; both were defeated by wide margins.

Disabilities law changed

In an 18-0 vote on Thursday, the Alaska Senate approved Senate Bill 174, a measure that instructs the Alaska Department of Health and Social Services to “take a flexible approach” in dealing with the treatment of people who have mental or physical disabilities. The measure now goes to the House for consideration. It was sponsored by Sen. Peter Micciche, R-Soldotna.

Other items

The Senate also approved two resolutions during its Thursday floor session. In a 16-1 vote, it proclaimed March 2 “Alaska Reads Day,” and in a 17-0 vote, it proclaimed April 2018 as “Sexual Assault Awareness Month.”


• Contact reporter James Brooks at jbrooks@juneauempire.com or call 523-2258.


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