NAII: CHANGE ARK. SCORING RULE

The National Association of Independent Insurers (NAII) has asked the Arkansas Department of Insurance (DOI) to remove several of what it feels are burdensome and costly requirements from the state’s recently released directive on the use of credit-related information in underwriting. In a letter to Insurance Commissioner Mike Pickens, the NAII detailed several areas where the directive, which becomes effective in September, either goes beyond the requirement of the federal Fair Credit Reporting Act (FCRA) or would require insurers to take action that will prove costly. According to James Taylor, southeast regional manager for NAII, “This directive places extreme burdens on agents and insurers that will be difficult to comply with and will add unnecessary expenses.” NAII seeks changes that would prevent the directive from extending FCRA protections to persons merely inquiring about insurance. Modifications are being sought in the section requiring insurers to file their models and provide the four major factors that have the greatest impact on a score. In addition, NAII is asking the department to remove a section that appears to ignore the fact that “no hits” have higher loss expectancies than most policyholders that have credit histories. As currently written, NAII believes this section could be interpreted to require insurers to use additional underwriting criteria that reflects credit as a neutral characteristic.