Kan. Commissioner Sounds Off on Scoring, More

March 20, 2003

Kansas Gov. Kathleen Sebelius “will be amenable to signing” a bill to restrict credit-based insurance scoring, according to Insurance Commissioner Sandy Praeger.

Sebelius, a Democrat who served as insurance commissioner for eight years before her election to the governor’s mansion in 2002, may soon see a scoring bill on her desk. Already passed by the Senate earlier this month, Substitute SB 144 is currently before the House Insurance Committee, which held hearings on the issue March 17.

“I think we’re going to be able to get this bill passed,” Praeger said. “We need to regulate scoring in a way that we can’t right now.”

That regulation would include prohibiting insurers from denying, canceling, non-renewing or setting rates solely based on an applicant’s insurance score. The bill also includes a provision that would prohibit insurers from raising rates in response to an insured’s request for an insurance score recalculation.

“Credit scoring can’t be the only factor,” Praeger said. “And [insurers] have got to clearly explain to the consumer why their premium has gone up.”

Praeger said the Insurance Department has “worked diligently” with industry trade groups to hammer out differences on the bill, which is based on the National Conference of Insurance Legislators model bill and on work done by a task force commissioned by the legislature last year.

“At least to begin with we wanted to find that balance,” Praeger said.

“All About the Budget”
Like nearly every other state in the nation, Kansas’ budget is in trouble. This has impacted a couple of the Insurance Department’s funds, according to Praeger, forcing it to phase out the state’s second injury workers’ compensation fund.

“We’re tightening our belts,” the commissioner said. “There were a number of positions left vacant during the anticipated transition. We’re trying to get along without some of those positions. We’re hearing rumblings that we may be getting some increases, but we haven’t seen it yet.”

Mold has not impacted Kansas the way it has so many other states, thanks in part to a lengthy drought.

“We think maybe that’s going to solve itself as we get better science,” Praeger said. The Texas case put everybody in reactionary mode. I’m anticipating that’s going to calm down.”

Kansas, which has caps in place on non-economic damages in medical malpractice cases, has premiums that “aren’t the lowest in country, but not the highest.” The true cost of increased litigation costs, Praeger said, is not with premiums but in the practice of defensive medicine.

“Accessibility is increasing as a problem we have to deal with,” Praeger said of the hardened market. “There are two ways of creating a problem. One is by increasing a premium to where no one can afford it, and then looking at risk and saying, ‘No we can’t afford it.’ Companies are facing a tough time just like everyone else. They’re looking for ways to save on the bottom line.”

Footsteps Already Followed
As for Praeger’s political future, being a loving grandmother is her top priority.

“If I end my public service as insurance commissioner,” she said, “I’ll feel like I’ve contributed.”

After succeeding Sebelius as insurance commissioner, Praeger said, “Someone asked me, ‘Are you planning to follow in Kathleen’s footsteps [and later seek the governorship]?’ And I said, ‘Well, I think I just did.'”

For your reference ~

NCOIL model credit scoring bill:

Substitute SB 144:

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