NAMIC Supports Credit Scoring in Testimony at Ohio Ins. Dept. Hearing

The National Association of Mutual Insurance Companies strongly supported the right of insurers to use credit information in making underwriting and rating decisions, in testimony before an Ohio Department of Insurance hearing Monday in Columbus.

“Credit-based insurance scoring has been shown to be a strong predictor of insurance loss, allowing companies to more accurately underwrite and rate their business,” testified NAMIC’s State Advocate, Joe Thesing. “As a result of credit based insurance scoring, many companies affirm that they can write more business with greater confidence, and most policyholders directly benefit realizing better rates and more choices in the marketplace.”

The testimony was given in connection with pending regulation proposals contained in draft 3901-1-55 concerning the use of credit history and credit-based insurance scores. It will remain open until Jan. 9, 2003.

Ann Womer Benjamin, Ohio’s newly appointed insurance commissioner, is expected to endorse final recommendations upon the close of the hearings. NAMIC is urging legislators to select regulations along the lines of those contained in the insurance scoring model act, recently adopted by The National Conference of Insurance Legislators (NCOIL).

“NAMIC commends Dan Kelso of the Ohio Insurance Institute and other industry advocates for their leadership in addressing industry concerns with the draft rule,” Thesing stated. “Passage of the model was the culmination of months of drafting and negotiating to create a proposal that was endorsed by all the national property/casualty trade associations and the agents associations, which is unprecedented.”

He testified that both the NCOIL draft and the proposed Ohio regulations are in many ways quite similar in their approach. “Both proposals contain ‘sole use’ restrictions for both rating and underwriting. Both provide consumer disclosure in the form of initial disclosure that credit is being used and disclosure in the case of an adverse action. And, both address concerns expressed by agents regarding consumer requests to be re-rated and re-underwritten if their credit situation changes.”

“However,” Thesing indicated, “we believe, the NCOIL model more clearly annunciates the obligations and rights of both consumers and insurers and, therefore, strikes a better balance between consumers rights and protecting the rights of insurers to utilize this valuable tool.” He asked the Department to “strike the current language in draft rule 3901-1-55 and replace it with all language contained in the NCOIL model act regarding the use of credit information in personal insurance.”

Topics Legislation Ohio