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House Democrats Advance Industry-Amended Auto Insurance Measure

Tolls photo.

A measure intended to help consumers by prohibiting the use of credit history by auto insurance companies cleared the House of Delegates on Friday, but not before being significantly amended in committee.

As originally drafted, House Bill 436 would have banned insurers from considering a motorist’s credit score when setting their premiums. Current law already prohibits companies from using credit histories when deciding whether to offer coverage to an individual driver.

The measure, sponsored by Del. Melissa Wells (D-Baltimore), seeks to protect people with sub-par credit scores from having to pay more to insure their vehicles. Advocates say such policies punish those at the lower end of the socio-economic spectrum.

But the insurance industry vigorously defends the use of credit scores, saying they are an accurate predictor of whether an individual is likely to submit a claim. Industry representatives also maintain that credit score is just one of many factors that determine a motorist’s premium. Maryland has a more competitive insurance market because credit scores may be factored into rate-setting, they insist.

The House Economic Matters Committee amended Wells’ bill on Thursday, eliminating the prohibition and adding language that would permit companies to lower rates if a consumer has suffered from a “catastrophic event,” illness, death of a family member, job loss or other factor.

Requests from motorists to insurance companies must be submitted in writing, and any relief that is provided, in the form of lower premiums, is at the “sole discretion” of the insurer.

The amendment was supplied by the National Council of Insurance Legislators, an industry-friendly organization. It was approved 13-7, with Democrats voting to support the measure and Republicans opposed.

“It’s definitely not what I wanted to happen to the bill,” Wells said after the committee vote. “There was nothing on the books before that someone could use. So this will at least give some reprieve (from high premiums), but there’s way more to be done.”

The 93-40 vote on the House floor also broke largely along party lines.

A measure identical to Wells’, House Bill 690, was defeated by the Economic Matters Committee unanimously. That bill was sponsored by Del. Jay Jalisi  (D-Baltimore County), a lawmaker who remains out of favor with his colleagues following his 2019 reprimand for mistreating his State House staff.