An Inconvenient Truth: Pricing Without Credit Is Possible and Problematic

When the National Council of Insurance Legislators passed model legislation on the use of credit data for insurance pricing in 2002, it seemed the big fight over the use of credit had come to an end. Most states allowed it, a handful did not, and the market settled down. However, due in part to the social turmoil of 2020, the door to reexamine the use of credit in insurance has been opened. The use of credit data is being challenged on the premise that the practice may have a disparate impact on certain consumers. Washington State’s regulator unilaterally restricted credit this year, and other regulators are asking hard questions. In this session, we’ll discuss what might happen if insurers lose the ability to consider credit data and take a deeper look at scenarios in which credit has been removed from rating plans.