The National Association of Independent Insurers had warned earlier that enactment of either measure would result in increased homeowners and automobile insurance premiums for many consumers "who are less likely to file claims or experience large losses."

"I struggle to understand how SB 6524 and HB 2544 can be portrayed as consumer-friendly legislation," said NAIC Northwest Regional Manager Michael Harrold.

He said that in the NAII's view, restricting insurer use of insurance scores would mean that consumers with favorable scores, who comprise the "vast majority," would be subsidizing through higher premiums "the much smaller number of individuals" considered higher insurance risks.

According to the NAII, one provision present in both bills would require insurers to charge better rates to individuals with little or no credit history.

The NAII and the other trade groups have consistently pointed out that the actuarial data of some insurance companies show that losses from people in that category are about 1.5 times higher than those of people with credit histories.

"That turns the principles of risk classification and fair pricing on their heads," Mr. Harrold declared.

The American Insurance Association, headquartered in Washington, D.C., also predicts higher rates for consumers with the enactment of a credit-scoring bill in Washington.

"Credit scores enable insurers to price policies accurately so policyholders are paying premiums which reflect their potential for losses," said Bill Gausewitz, AIA assistant vice president, western region.

"Numerous studies have shown a clear correlation between a consumer's credit history and his or her future insurance losses.

"The majority of policyholders pay lower rates because this tool enables insurers to accurately price their product," he observed.

According to the AIA, HB 2544 and SB 6524 would:

? Restrict insurers from using credit scores for cancellation or renewal decisions.

? Require insurers to notify an applicant of the reasons for an adverse decision made based on credit history information.

? Allow an insurer to use credit scores to deny coverage only in combination with other significant underwriting factors.

Mr. Gausewitz added that "credit scores have increased competition in the auto insurance market and this gives more consumers a broader range of choices."

He indicated that the AIA will continue to negotiate with Insurance Commissioner Mike Kreidler and the sponsors of the bills "to develop a proposal that will not hinder the use of this objective and consistent underwriting and rating tool."

The Alliance of American Insurers, based in Downers Grove, Ill., took a less pessimistic stance, calling HB 2544 "a big improvement over the original legislation, which would have all but eliminated insurers' use of ?[credit] data for underwriting and rating purposes."

As noted by Larry Kibee, Alliance Northwest regional vice president, "The rate caps are gone, as is the complete prohibition of using credit scoring in underwriting."

Although the House bill prevents the use of credit scoring for non-renewal and cancellation of policies, Mr. Kibbee cited favorably the measure's allowance of the use of credit scores in underwriting new business "in combination with other substantive underwriting factors."

Another positive feature of HB 2544, said Mr. Kibbee, "is the requirement that a preliminary review and analysis of insurance credit scoring issues be completed before the end of this year and presented to the legislature next January."

"The Alliance is confident that any objective study of insurer use of credit scores will show their ultimate fairness as an underwriting tool," he said.

Mr. Kibbee complimented Mr. Kreidler "for working with the insurance industry to preserve an essential underwriting tool and risk predictor for insurers, while assuring that it will be used fairly and to the advantage of the majority of policyholders that maintain good credit and enjoy insurance rate benefits because of it."