Local motorist groups in Utah are wondering if House Bill 110 is really being used according to its purpose or not. House Bill 110, which was successfully completed last March 6, 2002, aims to allow insurance provides to make use of the credit-based insurance scores for the initial underwriting in car insurance. When it comes to how companies charge premium rates, the bill limits the use of such scores only when it is to provide consumer discounts.
According to the National Association of Independent Insurers, the legislative action simply makes the use of credit-based scores useless. In addition, the organization claims that while the approval of using credit scores for the initial underwriting is beneficial, the bill somewhat defeats its purpose of such scores since insurance companies will not be able to compute the rates properly based on the actual risk.
The issue of whether the use of credit scores in computing for insurance premiums is beneficial or not has been around for some time now. And in Utah, motorist organizations seems to be making their opinions heard that they all agree that the use of credit score in auto insurance is indeed useful.
Insurance experts claim that several studies and years of experience have clearly shown that the use of credit scores is a very good tool in calculating who will file a claim in the near future. In the case with Utah, the state does not allow the use of credit scores when it comes to premiums computation unless it will result to lower rates for motorists.
In addition, insurance companies themselves argue that insurance scores will be put to waste if they will only be used to make premium rates go down. Insurance providers argue that they may not be able to cut back their rates for some of their clients who represent very high financial risks and have low insurance scores. According to them, these scores do not take into consideration address, race, income, marital status, or gender. Insurance scores allow an unbiased and objective way for rating and underwriting insurance premiums; other ways of
computing judge more areas, whereas insurance scores only look on what’s important.
According to reports, aside from House Bill 110, the National Association of Independent Insurers and Utah motorist groups are also going against House Bill 342. HB 342 allows car rental companies to get administrative fees and decreased value when it comes to collecting an insurance claim for stolen vehicles and damaged cars.
While local groups are making their opinions be heard as loud as possible, state officials remain quiet about the issue.