Insurance Consumer Advocate in Support of Senate Bill 662

TALLAHASSEE—Florida’s Insurance Consumer Advocate Sean Shaw has thanked Senator Ronda Storms for sponsoring Senate bill 662. If passed, the bill will prohibit the use of credit reports and credit score by insurers in making rating determinations.

On December 2, 2009, ICA Shaw sent a letter to Senator Ronda Storms thanking her for sponsoring Senate Bill 662. The legislation aims to offer Floridians who have seen their credit scores decline due to no fault of their own, protections that are not currently available. Insurance companies have been using credit scores in pricing premiums, thus, a reduced credit score may cause insurance premiums for consumers to increase.

“Given the condition the economy is in, now is the time to ensure that Floridians are being treated fairly by their insurance companies,” said ICA Shaw.

A copy of Insurance Consumer Advocate Shaw’s letter to Senator Storms is attached and below:

December 2, 2009

The Honorable Ronda Storms
Florida Senate
313 Robertson Street
Brandon, Florida 33511

Dear Senator Storms:

Thank you for your efforts in sponsoring Senate Bill 662, which prohibits the use of credit reports and credit scores by insurers in making rating determinations. As the Insurance Consumer Advocate, I have not been convinced of the necessity of using credit scores when determining insurance policy premiums. I have been equally unconvinced by arguments for the use of education and employment status in rating auto insurance policies.

Senate Bill 662 offers Floridians, who have seen their credit scores decline often for reasons beyond their control, protections that are not currently available. Credit card companies have reduced their exposure by lowering credit limits, and credit rating agencies have changed their scoring methods. These changes have resulted in lower credit scores for a significant portion of the population despite having paid their bills on time. Thus, if companies use credit scores in pricing premiums, a reduced credit score may cause insurance premiums to increase. At a time when our economy is struggling and unemployment is the highest it’s been in over 20 years, this is the time to ensure that our citizens are being treated fairly by their insurance company. Thank you for initiating this legislation that will protect many consumers who have been disproportionately harmed.

I would be happy to speak in support of your bill if you deem it helpful. In addition, I am available to assist in any other way that I can.

Sincerely,

Sean M. Shaw, Esq.
Insurance Consumer Advocate

SMS/RW

The Insurance Consumer Advocate is appointed by Florida Chief Financial Officer Alex Sink and is committed to finding solutions to insurance issues facing Floridians, calling attention to questionable insurance practices, promoting a viable insurance market responsive to the needs of Florida’s diverse population and assuring that rates are fair and justified.