Ind. Commissioner Withdraws Controversial ‘Sole-Use’ Bulletin

June 6, 2005

Indiana Insurance Commissioner Jim Atterholt has withdrawn a bulletin that interpreted the “sole-use” provision of the state’s credit-based insurance scoring law to prohibit insurers from taking adverse actions on credit unless another factor had changed.

Bulletin 123 was issued under the previous Democratic administration and said insurers could not deny, cancel, nonrenew or increase a renewal rate due to a credit score unless at least one other rating factor had changed to indicate a denial, cancellation, declination to renew or increase in the premium rate.

Indiana’s credit scoring legislation was passed in 2003 and was based on the National Conference of Insurance Legislators’ model act on credit scoring. The phrase was purposely left vague in the model legislation in order to garner consensus, but most states have interpreted the provision to mean that insurers must consider other factors in making a decision, but those other factors needn’t have changed to justify an adverse action.

Insurer groups and Indiana’s attorney general objected to Bulletin 123, arguing it contradicted the intent of the legislators who passed the credit scoring regulations.

On May 26, Atterholt replaced Bulletin 123 with Bulletin 130.

“As a former legislator, I want to make sure the department is not setting policy,” Atterholt said in an interview, “but is reflecting the policy and goals of the Indiana General Assembly.”

Indiana Gov. Mitch Daniels, a former top adviser to the current Bush White House, was elected in 2004 and appointed Atterholt after a previous nominee, Harold Calloway, turned down the job shortly after accepting it.

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