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Bill

Bill

A 2427

Prohibits use of education, occupation, and credit score as rating factors in automobile insurance underwriting.

2024-2025 Regular Session Introduced by Linda Carter and 7 co-sponsors

Bars auto insurers from using education, employment, or credit scores to rate; requires publicly filed, transparent underwriting rules to curb non-driving bias.

Introduced in the Assembly, Referred to Assembly Financial Institutions and Insurance Committee
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Bill Summary · A 2427

Summary of New Jersey Assembly Bill A-2427

Purpose

A-2427 would bar auto insurers from using certain personal characteristics as rating factors in underwriting and pricing. Specifically, it prohibits considering or inquiring about educational level, employment/trade/profession, or credit score (or information derived from a credit report) when assigning insureds to rating tiers or determining auto insurance eligibility. The bill aims to promote fairness and prevent bias in underwriting decisions.

Key Provisions

  • Underwriting rules disclosure and approval

    • Insurers must put in writing all underwriting rules applicable to each rate level.
    • All underwriting rules must be filed with the Commissioner of Banking and Insurance and are subject to prior approval.
    • Rules must be publicly accessible and applied uniformly across the state.
    • If an insurer has multiple rating plans for the same coverages, rules cannot allow acceptance under more than one rating plan.

  • Prohibitions on certain rating factors

    • Insurers may not base a rating tier on:
    • Educational level
    • Employment, trade, business, occupation, or profession
    • Credit score or any information derived from a credit report
    • Insurers may still consider other underwriting factors, such as driving record, but not the restricted items listed above.

  • Inquiries prohibited

    • No insurer may inquire of an insured, applicant, or a third party about the prohibited factors (education, employment, or credit information).

  • Revenue neutrality certification

    • If an insurer revises underwriting rules tied to motor-vehicle-point-based rating, it must certify to the Commissioner that the revised rules are revenue neutral for the insurer’s current coverages and book of business.

  • Penalties

    • A violation—specifically, failure to transact automobile insurance in accordance with the underwriting rules—could result in a fine of at least $1,000 per violation.

  • Effective date

    • The act would take effect on the 90th day after enactment.

Who Is Affected

  • Auto insurers operating in New Jersey, their underwriting departments, and their rate filing processes.
  • Applicants and insured individuals who would be protected from being rated or asked about education, employment, or credit information.

Legislative Status and Action

  • Introduced in the Assembly on January 16, 2025.
  • Referred to the Assembly Financial Institutions and Insurance Committee (sponsor: Linda Rosenthal).
  • Related companion: S-2944; prior-session related bills include A-9016, A-3443, and A-963.

Impact in Practice

  • Expected reduction in the influence of credit-based and non-driving factors on auto insurance pricing.
  • Increased transparency and uniformity in underwriting rules.
  • Potential administrative burden on insurers to file and defend underwriting rules and maintain public access.

For readers, the bill focuses on protecting consumers from non-driving bias in auto insurance pricing while tightening the regulatory oversight of underwriting rules.

Compiled from official sources — confirm details with the bill’s official record.

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