Maine has become the first New England state to send legislation to the governor that follows the National Conference of Insurance
Legislators (NCOIL) credit-based insurance model. The NCOIL model or a form of the model has been passed by 12 state legislatures this year.
Insurance scoring legislation was considered in five of the six New England states this year. Legislation died in Connecticut and New Hampshire and is pending in Rhode Island and Vermont. However, these states did not reportedly consider the NCOIL model. In 2002, Rhode Island enacted legislation that regulates the use of insurance scoring for rating and underwriting homeowners and personal auto insurance.
Maine’s legislation (HB 362) as originally introduced was reportedly very restrictive. The National Association of Independent Insurers (NAII) strongly opposed the bill until a working group of the Insurance and Financial Services Committee amended the legislation to follow the NCOIL model.
“The NCOIL model was a vast improvement over the original version of HB 362,” Ann Weber, counsel for the NAII, said. “The bill contained provisions that could not have been complied with by insurers and would have greatly diluted the effectiveness of using an insurance score. The legislation sent to the governor follows the NCOIL model regarding notice of adverse action language, which requires an insurer include up to four factors that were the primary influences of the adverse action, and specifically allows for standardized credit explanations provided by consumer reporting agencies.”
The legislation originally contained language stating that an insurer could not, “take an adverse action against a consumer based on negative credit information caused by illness, period of unemployment, or death of spouse.” Additionally, it would have required that “the specific reason” be given in adverse actions and that the “specific credit-based information used to support the underwriting decision” be stated.
“The NCOIL Model offered Maine legislators a viable option in addressing this issue. It enabled legislators to preserve insurers’ ability to use this highly predictive tool while providing consumer protections,” Weber concluded.
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