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February 22, 2005
TCAIS and many others have long known
that Texas consumers benefit from credit-based insurance
scoring because most policyholders pay less when insurance
scoring is used. In fact, without the use of credit-based
insurance scoring, 60-70% of Texans would see their rates
go up. If credit-based insurance scores were prohibited,
many lower risk Texans would be forced to subsidize customers
with higher risk.
Today, TCAIS is providing Texas lawmakers and consumers
with materials that give the credit scoring conversation
some context and some facts:
1.
Existing Laws Protect Texas Insurance Consumers: In
2003, the Texas Legislature passed landmark insurance
reforms to modernize the Texas insurance marketplace.
The laws encourage insurance competition while enacting
some of the nation's most stringent consumer protections
with regard to credit information.
2.
Take the Credit Scoring Quiz: Proponents of a ban
a on credit scoring are not likely to mention how such
a
ban would hurt Texans. Here are some questions you might
consider asking when such individuals propose a ban on
credit scoring. Read
how consumers suffered when Maryland banned credit scoring.
3.
Texas Consumers Benefit from Credit-Based Insurance
Scoring: Three recent studies, including the January
2005 Texas Department of Insurance (TDI) study, show
that the use of credit-based insurance scoring allows
companies to price policies more accurately, which
benefits 70% of Texans. TCAIS urges public policymakers to use caution when considering
legislative or regulatory changes to the use of insurance
scores by insurers to avoid increasing the premiums paid
by Texas consumers. Risk-based rating, to include credit-based
insurance scoring, must be part of a fair and accurate
system so that low risk consumers are not forced to subsidize
higher risk
consumers and incentives exist to actually minimize risk.
Sincerely,
Beaman Floyd
Director
Texas Coalition for Affordable Insurance Solutions
500 West 13th Street
Austin, TX 78701
Phone: (512) 477-7382
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