WASHINGTON– In what several consumer groups are calling a “major victory for consumers,” the Nevada Supreme Court has upheld the Nevada Division of Insurance’s temporary ban on use of credit information to determine insurance rates.
The insurance industry trade association, the National Association of Mutual Insurance Companies (NAMIC), had been challenging the rule that was issued by the Division in 2020, but was turned away.
The Consumer Federation of America and the Center for Economic Justice, which jointly submitted an amicus curiae brief to the Supreme Court, called the decision an “important protection” for Nevada drivers, especially as the elimination of pandemic-related financial protections puts many at risk of credit score declines.
The rule that was upheld prohibits insurance companies from using credit-based insurance scores to increase premiums until May 2024. This means that drivers will be temporarily protected from insurance premium increases resulting from credit declines stemming from the financial toll the pandemic has taken on Nevadans, the two organizations said.
People Won’t be ‘Penalized’
“Thanks to the work of the Division and the ruling of the state Supreme Court, Nevadans who suffered during the pandemic and who may be financially vulnerable will be protected from unnecessary and unfair auto, home, and renters’ insurance rate hikes,” said Douglas Heller, director of Insurance for Consumer Federation of America. “State law requires all drivers to carry auto insurance and banks require homeowners to maintain coverage as well. This rule will ensure that for the next year, people who are trying to get back on their feet won’t be penalized on their insurance premiums just because the pandemic created financial hardships.
‘Disingenuous Arguments’
Added Birny Birnbaum, director of the Center for Economic Justice, “The insurance industry offered a miasma of misinformation and disingenuous arguments about unfair discrimination in insurance and the Commissioner’s authority to stop unfair practices. Had the Court accepted these arguments, it would have effectively ended consumer protection in insurance in Nevada. Thankfully the Court rejected all the industry arguments. We thank Commissioner Richardson and the Nevada Attorney General for standing up to the insurance industry’s onslaught—funded by policyholder premiums—against insurance consumer protection.”
The CFA and CEJ said in its brief to the Court, the COVID-19 pandemic and responses caused massive disruptions, severing any link that insurers claimed to exist between a consumer’s credit history and their insurance risk.
Won’t Face Increases
The organizations said the protections created by the Division’s rule will ensure that consumers whose credit declines over the next year will not face credit-related premium increases due to any change in their credit reports or credit-based insurance scores that occurred on or after March 1st, 2020.
The consumer groups are also urging insurers to comply with the Court order immediately, and urging the Division of Insurance to take action against insurers that continue to impose credit-based penalties on Nevada customers.
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