The Utah Department of Insurance has modified its proposed rule on credit-based insurance scoring to allow insurers the use of this tool as long as other risk-related factors are considered.
The previous draft of the proposed rule conflicted with the new Utah law on insurance scoring that stated insurers can use credit in initial underwriting and thereafter give a discount in private passenger automobile policies, if used in conjunction with other factors.
The previous proposed rule stated that insurers may not use credit information as the “primary” reason to decline or refuse to issue a new personal auto insurance policy. The term primary was difficult to define and suggested that there is a weighing of factors considered. In addition, when the legislature enacted the law it considered the primary limitation and decided against using that concept.
The department also made several other positive changes to the draft including the deletion of the definition of “significant factor” as requested by NAII. Additionally, the department took into account some of NAII’s suggestions by eliminating some consumer notification requirements regarding adverse actions that went beyond the federal Fair Credit Reporting Act.
“The revised draft rule is a vast improvement to the original. Although the department did not make all the changes requested by the industry, they did take into account the industry’s most important concerns and revised the proposed rule accordingly,” said Ann Weber, counsel for NAII.
A public hearing on the proposed rule will be held May 20, and the comment period will extend to June 2, 2003.
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