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Committee tables bill to ban credit-based insurance scoring amid dispute over premium impacts and uninsured drivers
Summary
The House Commerce & Economic Development Committee voted 7-2 to table House Bill 80, which would bar insurers from using credit, education and occupation in personal auto rating; supporters said the ban would reduce disparate pricing for low-credit drivers and help lower the state’s uninsured motorist rate, while insurers warned of broad premium increases.
House Bill 80, which would prohibit auto insurers from using credit information, education and occupation when rating personal auto insurance, was tabled by the House Commerce & Economic Development Committee on a 7-2 vote.
The bill’s sponsor said insurers’ use of credit-based insurance scoring results in markedly higher premiums for drivers with lower credit scores, even when driving records are similar. The superintendent of insurance and the chief actuary for the Office of Superintendent of Insurance testified in favor of the bill, saying credit scores are predictive but not causal of driving claims and that removing credit as a rating variable would reduce disparate impacts on low-income and minority drivers. “Credit-based insurance scoring is highly predictive... but it is also highly correlated with race and low income,” the chief actuary said.
Insurers and agents strongly opposed the bill. Brent Moore of the American Property Casualty Insurance Association, representatives of State Farm, and independent agents warned that banning credit information would push some carriers to leave segments of the market or raise premiums for many policyholders, particularly seniors and people on fixed incomes. A LexisNexis analysis cited by opponents said 40% of New Mexico policyholders aged 65 and older would face premium increases of at least 20% if the bill became law.
Consumer advocates urged the measure, citing research showing large premium gaps tied to credit scores and arguing that such gaps are unrelated to driving risk. “Drivers with poor credit pay on average $733 — or 78% — more than drivers with excellent credit even if they had a perfect driving record,” said Michael DeLong of the Consumer Federation of America.
During committee questions members focused on enforcement of existing compulsory-insurance laws, the effect of redistributed premiums on currently insured groups and whether reduced uninsured motorist rates would follow from the reform. Committee leaders and many members said they wanted more data on how eliminating credit-based scoring would affect accident frequency, premium levels across demographics and the number of uninsured drivers.
After deliberation the committee voted to table the bill; proponents and opponents both said the issue merits further study and data-driven analysis.
