Bill to bar insurers from using credit reports passes House

March 23, 2002|By Michael Dresser | Michael Dresser,SUN STAFF

Prompted by protests from angry consumers, the House of Delegates passed a bill yesterday that would prohibit insurers from using credit histories to deny, cancel or set rates on auto and homeowners' policies.

The legislation, which the House passed, 117-20, goes to the Senate.

The measure would ban an increasingly common industry practice known as "credit scoring," in which reports from credit agencies are used as a significant factor in insurance decisions.

During hearings, a House committee heard accounts of insurance customers with no record of claims whose rates were increased 50 percent to 100 percent because of bad credit ratings.

The bill has been opposed by most large insurance companies but supported by many independent insurance agents.

Insurance industry representatives say credit history has been shown to have a strong correlation to the risk of future claims. They contend that the bill would force companies to raise rates for the majority of customers with good credit histories.

If Maryland bans the practice, it will join several other states that have taken regulatory or legislative action to forbid it.

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