Insurance companies are concerned that new regulations adopted by the New York Insurance Department regarding the use of credit information for personal lines coverage could be more burdensome than necessary.
The department’s rules generally follow the statute’s intent, which was to allow insurers to use credit information when underwriting personal lines insurance policies, according to Kristina Baldwin, regional manager and counsel for the Property Casualty Insurers Association of America. However, she added, a few of the rules are problematic. For example, one rule appears to indicate that insurers must present individual filings regarding every consumer without neutral credit information, which Baldwin said is “a clearly unrealistic expectation.”
Another requirement notes that policyholders may have new credit scores calculated every 36 months and could require re-underwriting at midterm rather than at renewal, Baldwin noted.
One section also includes disclosure and adverse action notice requirements that require insurers to produce more printed documents, a mandate that Baldwin said ultimately increases costs to insurers and slows down underwriting.