NCOIL Credit-Based Scoring Model Reportedly Gaining Momentum

May 6, 2003

The National Conference of Insurance Legislators (NCOIL) credit-based scoring model is gaining momentum after the first four months of this year’s state legislative season, an official of the National Association of Mutual Insurance Companies (NAMIC) reports.

NAMIC Vice President of Regulatory Affairs Roger Schmelzer said that as of May 1, nine states had enacted some form of the NCOIL model, which was adopted by that organization in November 2002. The states include Arkansas, Arizona, Georgia, Indiana, Kansas, Nebraska,
North Dakota, Oklahoma and Virginia.

“Going into this legislative season we knew insurance scoring would be an issue in as many as 40 states. Our goal was to advocate the NCOIL model as a solution that strikes an excellent balance between fairness to consumers and the underwriting prerogatives of insurance
companies,” Schmelzer said, noting that some legislative proposals called for either an outright ban on using credit information or severe restrictions on its use.

“After four months, it’s obvious that legislators across the country have begun to see that the NCOIL model presents the best public policy to address this issue,” Schmelzer added. “Our NAMIC advocates have done a good job in making legislators aware of the model and urging its passage in states they monitor.”

NCOIL deserves great credit for the leadership it has taken to resolve the uncertainty over how insurance scores should be used, according to Schmelzer. “This is an explosive political issue for many and NCOIL has offered a common-sense solution that speaks to all stakeholders.”

Schmelzer added that credit-based insurance scoring bills are still active in Florida, Illinois, Louisiana, Maine, Nevada, North Carolina, Oregon, Rhode Island and South Carolina, where bills have passed at least one legislative chamber. He also expects to see action this year in states such as Michigan, and Pennsylvania, where legislators meet for the entire year.

Two other states so far have enacted credit-based insurance scoring bills this year that do not follow the NCOIL model.

In Colorado, lawmakers enacted HB 1273, which requires insurers
to notify their policyholders when they use credit information. And in Wyoming, lawmakers enacted SF 81, which authorizes the insurance commissioner to adopt rules on the use of credit scoring in the underwriting of personal lines, motor vehicles and homeowner policies.

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