What's happening
This bill directs the superintendent of financial services to prohibit the use of credit scores in setting auto insurance premiums in New York.
Why it matters
Addresses fairness in pricing. By prohibiting the use of credit scores to set auto insurance rates, the bill aims to ensure premiums are based on factors more directly related to driving risk, rather than consumers’ unrelated financial behaviors.
Protects consumers from unpredictable costs. Many people are not aware of changes in their credit scores, so this change could help prevent unexpected and difficult-to-manage jumps in insurance costs that aren’t tied to driving history.
Reduces potential discrimination. Credit scores can reflect socioeconomic disparities and may disproportionately impact lower-income individuals or those with limited credit histories, so removing them from rate calculations could make insurance pricing more equitable.
Requires industry adjustment. Insurers would have to review and alter their existing actuarial methods, potentially leading to changes in how they assess risk and price policies, which could have broader impacts on the auto insurance market in New York.
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Who cares
Headline styles
Sponsors
1 Co-sponsor
History
- Referred to insurance
- Referred to insurance
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
4534
2019-2020 Regular Sessions
IN SENATE
March 14, 2019
Introduced by Sens. PARKER, ADDABBO -- read twice and ordered printed, and when printed to be committed to the Committee on Insurance
AN ACT to direct the superintendent of financial services to promulgate rules and regulations relating to excluding the use of "credit scores" in determining auto insurance premiums
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Legislative intent. The legislature finds that the practice of using "credit scores" to determine auto insurance premiums can result in premium fluctuations that are difficult for consumers to manage. In addition, consumers may not be aware of changes in their credit rating and therefore would not have the information they needed to exercise responsible control over a factor which could affect their insurance rates.
The legislature further finds that a "credit score" comes from information contained in consumer credit reports and is considered along with other motor vehicle and driving records to compute insurance risk at a particular point in time. Insurance scoring is predicated on a statistical correlation between personal money management and insurance risk. Insurance scoring is one of many factors which can be used to evaluate risks and assign rates.
Accordingly, the legislature finds that, since it is a calculation that is one of many used actuarial calculations it need not be a decisive factor. It is the purpose of this act to direct the superintendent of financial services to promulgate any rules and regulations necessary to prohibit the use of this method of calculating risk in the formulation of auto insurance premiums on policies held by residents of New York.
§ 2. The superintendent of financial services shall review the actuarial methods and formulas currently utilized to determine auto insurance premiums for New York consumers. Such review shall include a determi-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD10639-01-9
S. 4534 2
nation of whether or not the manner in which insurance premiums are determined includes the use of "credit scores" or similar means of utilizing consumer credit reports to determine a statistical correlation between personal money management and insurance risk. If such superintendent determines that such methods are utilized he or she shall promulgate amended rules and regulations which do not include the use of credit scoring methods. If such superintendent determines that such methods are not utilized, he or she shall promulgate rules and regulations which prohibit the future use of credit scoring methods.
§ 3. This act shall take effect on the one hundred twentieth day after it shall have become a law, provided, however, that effective immediately, the addition, amendment and/or repeal of any rules or regulations necessary for the implementation of the provisions of this act on its effective date is authorized and directed to be made and completed on or before such effective date.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to direct the superintendent of financial services to promulgate rules and regulations relating to excluding the use of "credit scores" in determining auto insurance premiums
Purpose
Directs the superintendent of insurance to promulgate rules and regu- lations limiting the use of credit scores to determine auto insurance premiums.
Summary of provisions
The superintendent of insurance shall review the actual methods and formulas currently utilized to determine auto insurance premiums for NY Consumers. If the superintendent determines that such methods are currently utilized, he or she shall promulgate amended rules and regu- lations which do not include the use of "credit scoring" and regulation which prohibit the future use of credit scoring methods.
Justification
This bill allows the superintendent of insurance to promulgate rules and regulations excluding the use of credit scores, not allowing insurance companies to raise or lower premium rates based on credit score history.
Legislative history
2017-18: S3470 - Referred to 2015-2016: S.1587 - Referred to Insurance 2013-2014: S.3207 - Died in Insurance 2011-2012: S.1128 - Died in Insurance
Fiscal implications
None.
Effective date
This act shall take effect on the one hundredth twentieth day after it shall have become a law, provided, however, that effective immediately, the addition, amendment and/or repeal of any rules or regulations neces- sary for the implementation of the foregoing sections of this act on its effective date is authorized and directed to be made and completed on or before such effective date.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.