NEW MEXICO
New Mexico Mulls Banning Credit-Based Insurance Scoring
SANTA FE, N.M. //BestWire// - A bill was introduced in the New Mexico House of Representatives that would bar insurance carriers from using credit information when underwriting, rating or renewing a personal automobile, motorcycle or RV policy.
Current state law already bars coverage denials based on a policyholder’s income, gender, location, sex, race, religion or marital status, according to a synopsis of House Bill 80.
Banning the use of credit information could result in more New Mexico drivers becoming insured, the bill’s summary said. In 2022, New Mexico had the second-highest rate of uninsured motorists in the country, with 24.9% of drivers in the state forgoing coverage, according to Insurance Information Institute data. In 2022, the national uninsured motorist rate was 14%.
The summary noted the use of credit scores in rate setting hits lower-income drivers particularly hard and contributes to coverage affordability issues in the state.
However, the ban could also drive carriers out of the state or result in premium increases for all New Mexico drivers, the summary said. The move could also result in a large increase in uninsured motorists.
In addition to potentially increasing private auto premiums, the bill could hurt independent insurance agencies across the state, trade group the Independent Insurance Agents of New Mexico said in a statement.
“This bill creates an uneven playing field for direct writers and independent agents,” Matt Hunton, chief executive officer for the IIANM, said. “With the cost of everything increasing and auto insurance claims costs rising, now is not the time to take away discounts provided to the lowest-risk drivers.”
The American Property Casualty Insurance Association said credit information has been used by insurance carriers for decades and can accurately predict the likelihood and severity of a claim.
Currently, New Mexico drivers with good credit save $185 annually compared to drivers with have average credit. Those with excellent credit scores see an average annual savings of $537, the APCIA said, noting most consumers get a discount when credit information is considered in rate setting.
“HB 80 would raise auto insurance rates for some of the most respected members of our communities — from teachers, nurses, and seniors to law enforcement, firefighters and military officers,” Walter Gonzales, APCIA assistant vice president for state government relations, said. “When insurers can accurately underwrite risks, consumers benefit from accurate, more equitable rates and more choices in a stable insurance market.”
Attempts to gain comment from the bill’s sponsor, state Rep. Elizabeth Thomson, a Democrat representing District 24, were unsuccessful.
New Mexico would not be the first state to attempt this type of ban. In recent years, Nevada and Washington have attempted to institute prohibitions on the use of credit scores in underwriting (BestWire, Feb. 21, 2023). Both state’s attempts were rebuffed by the courts, but Washington’s new insurance commissioner is pushing for an underwriting study that would look at the use of credit-based insurance scores (BestWire, Feb. 10, 2025).
The five largest writers of private passenger auto insurance in New Mexico during 2023, based on direct premiums written, were: State Farm Group, 22.79%; Progressive Insurance Group, 18.34%; Berkshire Hathaway Insurance Group, 11.44%; USAA Group, 9.45%; and Farmers Insurance Group, 8.6%, according to BestLink.
(By Steve Hallo, senior associate editor, BestWire: Steve.Hallo@ambest.com)