A bill restricting insurers’ use of credit information for personal lines underwriting and rating passed the Senate Aug. 20 and heads to the
Oregon Governor Ted Kulongoski’s desk for his consideration.
“Senate Bill 260 attempts to balance consumers protections with the need for insurers to rely on sound, reliable information, like that contained in insurance scores,” said Sam Sorich, vice president and western regional manager of the National Association of Independent Insurers (NAII). “The bill is based on the model legislation by the National Conference of Insurance Legislators (NCOIL), and is considered a compromise. We hope Gov. Ted Kulongoski signs the bill into law.”
The bill goes beyond Oregon’s newly-adopted credit regulations, Sorich said, which took effect June 1. If SB 260 becomes law, it will create challenges for insurance companies who had to gear up for the regulations and now must comply with similar, but not identical, stipulations in the bill.
“NAII companies stand ready to do our best to comply with the bill once it becomes law,” Sorich said.
SB 260 has been considerably modified throughout the legislative session. When the Senate passed SB 260 on April 23, the bill included provisions that would have prohibited personal lines insurers from using credit information for underwriting or rating. NAII lobbied for changes in the bill in the House. For the past three months, SB 260 was pending before the House Rules Committee. On Friday, the bill passed the House floor, with the Senate following suit on Wednesday.
The current version of SB 260 contains the following:
· An insurer may not cancel or nonrenew a policy that has been in effect for more than 60 days based in whole or in part on credit information;
· When credit information is used to decline an application for insurance, the information must be used in combination with other underwriting factors;
· Certain credit factors may not be used to calculate an insurance score. These factors include credit inquiries not initiated by the consumer, inquiries related to insurance coverage and the consumer’s total available line of credit;
· An insurance score may not consider the absence of credit or the inability to determine a consumer’s credit history, unless these characteristics are used as allowed by rules adopted by the director of the Department of Consumer and Business Services;
· At the time of renewal, an insurer may only use rating factors other than credit history to rerate the policy;
· If an insurer makes and adverse underwriting decision based on credit information, the insurer must provide the consumer with a summary of the most significant credit reasons for the decision;
· Insurance scoring models must be filed with the director of the Department of Consumer and Business Services.
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