The Property Casualty Insurers Association of America (PCI) testified before the Maryland Senate Finance Committee against legislation that would prohibit insurers from using marital status, education, or employment for policy decisions, claiming it could hurt consumers.
A synopsis of Senate Bill 534, entitled, “Motor Vehicle Insurance – Discrimination in Underwriting and Rating – Prohibitions,” said auto insurers are prohibited from “refusing to underwrite, canceling, refusing to renew, rating a risk, or increasing a renewal premium based, in whole or in part, on the marital status or employment or occupation of or education level attained by the insured or applicant.”
It also seeks to repeal provisions authorizing an insurer, under specified circumstances, to use the credit history of an applicant to rate a new policy.
“It is important consumers realize that they significantly benefit from insurers use of accurate predictors of loss to price their products,” Dave Snyder vice president of policy at PCI, said. “Credit-based insurance scores have proven to be one of the most accurate predictors for risk of loss and therefore allow insurers to offer lower rates to many policyholders.”
The bill is a companion to House Bill 916.
“Senate Bill 534 and House Bill 916 could have negative effects on consumers by potentially denying the majority of responsible policy holders lower rates in order to subsidize higher risk drivers,” Snyder said. “The legislation also could potentially prevent insurers from offering discounts or underwriting specifically for service members and their families, teachers, farmers, and other groups.”
Snyder said the best way to reduce costs in auto insurance is to reduce accident frequency and severity.
“PCI encourages the lawmakers to promote driver safety and enact highway safety laws to protect motorists and pedestrians and keep insurance costs stable,” Snyder said. “PCI will continue to engage the committee and the legislature on the serious implications of this legislation.”
Oyango Snell, PCI’s counsel for state government relations, also testified in opposition of Senate Bill 533, which would establish a Low-Cost Automobile Insurance Program. The program would sell, issue, and deliver automobile insurance policies to individuals who meet eligibility requirements. Private automobile insurance carriers would not be allowed to participate in the program.
“PCI supports efforts to keep insurance affordable for consumers. Senate Bill 533, however, could increase insurance costs by limiting competition by prohibiting private auto insurance carriers from offering low cost insurance products,” Snell said. “PCI opposes any legislative effort to stifle competition and limit consumer choice in the insurance marketplace. PCI will continue with industry partners to push back against enactment of Senate Bill 533 and other MAIF legislation.”