Loss-History Data Under Scrutiny in 31 States

July 14, 2004

Lawmakers or insurance regulators in 31 states have questioned the practice during the past 18 months, and at least 14 states and the District of Columbia have enacted provisions dealing with use of this information, according to a leading insurance lobby.

Most efforts to ban the use of the Claims Loss Underwriting Exchange (CLUE) and similar databases have failed, according to Rey Becker, a lobbyist with the Property Casualty Insurers Association of America (PCI). Becker will participate in a panel discussion on loss history databases at the National Conference of Insurance Legislators (NCOIL) summer meeting in Chicago on July 17.

Last year legislation was enacted in Arizona, Texas and Virginia, and regulatory action was taken in California and the District of Columbia, according to PCI. Thus far this year, bills have been enacted in Arizona (amending last year’s enactment), Colorado, Florida, Georgia, Oklahoma, Utah and Wyoming. Bills are awaiting the governors’ signatures in Louisiana and North Carolina. Regulatory action has been taken in Arkansas and Delaware.

The biggest beef consumers and politicians have had about loss-history data is the alleged inclusion of mere claims inquiries, rather than actual claims, in the industrywide databases. Another lobbyist for PCI, Lynn Knauf, said in a statement that most consumers’ understanding of what constitutes a claim differs from that of insurers. Many consumers don’t believe a “claim” has been filed until the insurer pays for damage. At least some insurers, according to Knauf, record a claim once any loss or damage has been reported to them.

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