Kansas Insurance Commissioner Sandy Praeger has introduced a bill that would regulate how much an insurance company can use a customer’s credit rating in determining insurance rates.

Praeger, R-Lawrence, said her office had received complaints about insurance companies increasing a customer’s premium solely because of a spotty credit history.

The practice, called credit scoring, is legal, but Praeger said the state needed a law that regulated how insurance companies could use credit reports.

Specifically, the bill would prohibit insurance companies from relying solely on credit scoring as a reason for increasing a customer’s premium.

“If a consumer has never had a claim against their homeowners or their car insurance, they are a little befuddled about why their premiums are going up,” Praeger said.

The bill also would require insurance companies to notify consumers if they are using credit scoring practices. The companies also must reveal what formulas they use to evaluate credit history.

“We want to make sure there are no discriminatory practices in place,” Praeger said.

The insurance industry has defended the use of credit scoring, saying that a person’s credit history has proven to be an accurate predictor of future claims activity, particularly for car insurance and homeowners insurance.

Praeger said she was not seeking to have the practice banned in the state.

“We’re just saying that if it is going to be used, we need to have good regulations,” Praeger said. “For people who have good credit, I think it will actually help keep their rates down in the long run.”

The bill received a hearing Wednesday before the Senate Financial Institutions and Insurance Committee. Praeger said she expected the committee to take action on the bill late next week. The bill is SB 144.