Relating to use of credit scores in applications for insurance
Summary
HB5263 would restrict how insurers in West Virginia may use credit information when underwriting and rating certain insurance policies. The bill amends the state’s insurance code to prohibit an insurer, agent, or broker from declining a private passenger automobile liability policy based solely on an adverse credit report or adverse credit scoring, and it further bars adverse action based on the number of credit inquiries or on disputed information contained in a credit report or credit score report. It also preserves insurers’ ability to use legitimate, documented underwriting data for independent risk assessment, so the measure is framed as a targeted limitation rather than a complete ban on underwriting discretion.
The bill also changes the state’s ratemaking rules for casualty insurance by stating that credit scoring may not be considered in calculating rates for homeowners or automobile liability policies. In addition, if a credit score is used in a rating process, the bill limits that score to one generated by a banking institution as defined in state law. The bill makes corresponding changes to the commissioner’s authority to disapprove filings, ensuring that rate manuals, rating plans, and related filings cannot rely on prohibited credit-scoring practices.
Impact
HB5263 would amend West Virginia Code §§33-6B-3, 33-20-3, and 33-20-5, directly affecting automobile liability and homeowners insurance underwriting and ratemaking. It would prohibit insurers from using adverse credit scoring, disputed credit-report information, or the number of credit inquiries as grounds to decline coverage, and it would remove credit scoring as a permissible factor in casualty insurance rate calculations for homeowners and auto liability policies. The bill would also narrow the type of credit score that may be used in any remaining permissible context to scores from banking institutions, and it would constrain the Insurance Commissioner’s review of filings to enforce those limits.
Sentiment
The bill’s stated purpose and structure suggest a consumer-protection approach aimed at reducing the role of credit history in insurance decisions. Because the available record contains no committee transcript or vote data, there is no documented debate or recorded opposition in the provided materials. On its face, the bill appears designed to be favorable to consumers who may be harmed by credit-based insurance pricing or declinations, while still preserving insurer access to other underwriting data.
Contention
The main policy tension is between consumer advocates who would favor limiting credit-based insurance practices and insurers who may argue that credit information is a useful predictor of risk and helps price policies accurately. A likely point of contention is the bill’s restriction to banking-institution credit scores, which could raise questions about implementation, data availability, and whether insurers can continue to use alternative underwriting models. Another possible issue is the bill’s treatment of disputed credit-report information and inquiry counts, which may be viewed as broadening protections for applicants but narrowing insurer discretion.