NCOIL Adopts Credit Scoring Model, Stalls Aftermarket Parts Model

November 26, 2002

The National Conference of Insurance Legislators (NCOIL) has adopted a credit scoring model act, but postponed action on an aftermarket crash parts model act and a proposal to fund consumer representatives at its recent meeting in San Francisco.

The National Association of Independent Insurers (NAII) praised legislators for adopting the credit scoring model act saying that insurers are able to write more business and most consumers pay less for their policies and have a wider choice of companies as a result of the use of credit scores.

“NAII is pleased that NCOIL made the decision to adopt the credit scoring model. As we have said before, this model, though not perfect, embodies solid consumer protections while at the same time preserving companies’ ability to use this important underwriting and rating tool,” James Taylor, NAII southeastern regional manager, said. “The timing of the adoption of the model was also very critical because now state legislatures will be able to review the model for legislative proposals during the upcoming 2003 sessions.”

The aftermarket crash parts model act was tabled until 2005. The NAII and other industry groups criticized eight distinct amendments in a recent draft and said that each change would be problematic. As written, the industry said the model would be opposed on a state-by-state basis and adoption of it would weaken NCOIL and its model bill process.

“The NAII represents companies that write nearly half of all private passenger auto insurance nationwide and we are well aware of the importance of the availability of aftermarket parts in controlling costs by increasing competition in the auto parts marketplace. We are pleased that NCOIL is willing to go back to the drawing board to create a model that could be strongly supported by insurers and truly benefit consumers,” NAII Counsel Robert Hurns remarked.

In other action, a proposal to fund consumer representatives that attend NCOIL meetings was defeated. NAII pointed out the difficulties and inconsistencies that the National Association of Insurance Commissioners (NAIC) continues to face with its funded consumer representative program and urged NCOIL to reconsider its proposal.

“As elected officials you are the ultimate consumer advocates,” said Robert Zeman, NAII vice president, state government affairs in a letter to legislators before the meeting. “NCOIL also has input from consumers from a variety of sources including academic experts and others that represent the interest of consumers. We are happy that NCOIL dropped the proposal for a funded consumer program and will continue its tradition of hearing from all advocates, without regard to funding considerations.”

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