NCOIL Scoring Model Advances in Neb.

February 21, 2003

The Nebraska Banking, Commerce and Insurance Committee has approved an insurance scoring bill favored by insurers while voting down a bill that would have banned the use of credit information by insurers.

Legislative Bill 487, which follows the National Conference of Insurance Legislators’ (NCOIL) model act for credit-based insurance scoring, requires an insurer to notify an applicant for
insurance that credit information will be used in underwriting and rating. It requires customer notification of the primary factors that resulted in an adverse action being taken. The scoring model used must be filed with the Department of Insurance and it will be treated as a trade secret.

“The NCOIL model is positive in that it addresses many of the concerns of the producer community and does not artificially impede insurers’ ability to use this accurate and cost-effective underwriting tool,” said Ann Weber, counsel for the National Association of Independent Insurers, a trade group that represents 715 companies.

“Although the model is not perfect, it embodies solid consumer protections while at the same time preserving companies’ ability to use this important underwriting and rating tool. It provides needed trade secret status to the computer models used to calculate the various factors used to determine a score. By providing the department with the methodology, insurers are being open in the process. By maintaining the information as a trade secret, the department can protect consumers as well as insurers’ interests in a competitive marketplace.”

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