AIA Calls on MN Commerce Dept. to Rescind Credit Scoring Regs.

The Alliance of American Insurers called on the Minnesota Department of Commerce to rescind regulations contained in a series of recently issued documents setting forth procedures and filing instructions for companies intending to use credit scoring in underwriting and rating.

The AIA indicated that the rules “far exceed” the scope of regulations needed to protect consumers. The bulletin stated, “In addition to a copy of the newly enacted law governing the use of credit scoring, the documents include guidelines for submission of filings and a notice requiring insurers to submit information regarding consumer protection practices in connection with the insurer’s use of credit information.”

“The information required to be filed with scoring formula and methodology is excessive, with some requirements vague enough to allow room for filings to be disapproved for non-substantive reasons, should the department choose to take that course,” stated Bill Schroeder, VP of the AIA’s Midwest Region. “In addition, the requirement for submission of information to assure compliance with ‘consumer protection practices’ imposes additional regulatory requirements without following regulatory protocol. By requiring insurers to file an additional ‘laundry list’ of information in this manner, the department is attempting to create regulation without the required comment and public hearing period.”

Schroeder noted that the Alliance is concerned with the “adversarial nature” of the department’s correspondence and along with several other insurance industry organizations, including the Insurance Federation of Minnesota, is contemplating what action to take next.

“It seems that the department is seeking to make compliance difficult, if not impossible, for insurers,” he added. “While their stated motive may be ‘consumer protection,’ any effort to block insurers from using actuarially proven, objective, non-discriminatory rating or underwriting tools clearly is not in the best interest of a competitive marketplace.”

Topics Legislation Minnesota