A bill passed by the Alaska Senate on Thursday would allow car insurers to use credit histories to determine premium rates when customers renew their policies.

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Until 2003, insurers in Alaska were barred from using credit histories to determine how much customers would pay. That year, the state allowed them to start using these records for new applicants. But they still couldn’t use them for people who are renewing policies.

House Bill 195 would allow the companies to begin to use these histories.

Anchorage Republican Sen. Mia Costello said during the floor debate that the bill would allow those with good credit to pay lower, “preferred” rates.

“Like it or not, credit scores are actually an indicator of risk, and so this is what that insurance is entirely based on,” Costello said.

Anchorage Democratic Sen. Bill Wielechowski opposed the bill. He pointed to a 2003 state report that found that areas with low-income and minority Alaskans would pay more.

“Everyone will have people in their district who will suffer if this bill passes,” Wielechoswki said. “The working poor will suffer. Minorities will suffer. Those in rural Alaska will suffer. Seniors will suffer.”

Wielechoswki said auto insurance premiums should be based on people’s driving records. He quoted research by Consumer Reports magazine.

“In the vast amount of states that allow the use of credit scores, a poor credit history will have a greater impact on your auto insurance premium than a drunk driving conviction,” Wielechoswki said.

Soldotna Republican Sen. Peter Micciche voted for the bill. He noted that new insurance consumers have been affected by similar rules for 15 years.

“I represent all Alaskans in my district, not just the underprivileged,” Micciche said, later adding, “We’re talking about this in a way, almost as though it hasn’t been the law of the land for many years that credit history is used.”

The Legislature passed a similar bill two years ago. Gov. Bill Walker vetoed it. But Walker introduced the new version, which includes more consumer protections than the earlier bill.

For example, the bill would require insurers to notify consumers that there are a series of exemptions allowing some consumers to not have their credit histories used. Those exemptions include people who have had serious injuries, divorces or unemployment that lasts at least three months from involuntary terminations.

In addition, when people appeal the use of their credit histories, the state Division of Insurance would be able to decide on the appeal. In the bill Walker vetoed, the insurer would have ruled on the appeal.

The Senate voted 13 to 4 to pass the bill, with Wielechowski and three fellow Democrats – Tom Begich and Berta Gardner of Anchorage and Dennis Egan of Juneau – the only no votes. Sens. Lyman Hoffman of Bethel, Shelley Hughes of Palmer and Gary Stevens of Kodiak were absent.

The House passed the bill 39 to 0 last year. Nikiski Republican Mike Chenault was absent. The bill now heads to Walker’s desk.