The Property Casualty Insurers Association of America is speaking out in favor of credit-based insurance scores as Maryland legislators have rejected a move to exclude the practice for auto insurers.

Senate Bill 797, sponsored by State Sen. George W. Della Jr. (D-Baltimore City), sought to prohibit the insurer of a private passenger auto insurance from rating a risk based in whole or in part on the credit history of an applicant.

State law prohibits homeowners’ insurers from using credit information in underwriting or rating and also prohibits private passenger auto insurers from using credit information for underwriting, but allows the information to be used in rating new policies within 40% rate collars – either a surcharge or discount of up to 40%, according to PCI.

In March, PCI testified against SB 797, which the national trade association said would “harm most consumers” if passed.

“Credit-based insurance scoring allows insurers to set rates appropriately and ensure that policyholders are charged based on their risk of loss,” said Richard Stokes, regional manager and counsel for PCI, in a statement. “Legislation banning or restraining the use of this tool would hurt policyholders’ ability to secure lower costs and deprive insurers of one of their most predictive underwriting tools. Consumers want to pay a fair price for insurance that matches their risk of loss. To achieve the goal of pricing based on an individual’s risk of loss; insurers simply want to use the most accurate, statistically valid tools available and credit information has proven to be one of the best predictors of loss.”

The legislation recently received an unfavorable report by the Senate Finance Committee, a move praised by PCI as Maryland is the latest state to reject such efforts.

As of March 13, 19 states, including Maryland, New Jersey, New York and Pennsylvania, have introduced legislation to ban the use of credit; six of those states have defeated bills.

“We are confident that public policymakers will see the value of risk-based pricing and recognize it is the fairest process to use for insurance underwriting and rating,” the organization said in a statement.

PCI represents more than 1,000 companies that write 36% of the U.S. property-casualty market.