Fla. Insurers Work With OIR to Develop Credit Regulations

November 19, 2003

Representatives of the insurance industry in Florida met last week with the Office of Insurance Regulation (OIR) to try and reach a compromise a draft proposed regulation dealing with the use of insurance scoring in underwriting and rating.

“The effect of this regulation seems to excessively restrict the use of credit, in spite of the clear legislative intent of recently enacted Senate Bill 40A,” said James Taylor, southeastern regional manager of the National Association of Independent Insurers (NAII). “The draft contains a number of onerous and overly burdensome provisions that would all but nullify the use of insurance scoring.”

Some problematic areas reportedly include:

 Requiring insurers to provide disparate impact studies that race and national origin are not included in insurance scoring criteria, although this information is not collected by insurers and has no bearing on credit models;

 Requiring insurers to certify that they are not using insurance scores to determine rates of hurricane coverage, although such scores are not used for that exposure; and

 Requiring insurers to demonstrate the validity of their insurance scoring models by providing a list of names and resumes of everyone involved in developing the credit models.

“Some of these proposed requirements aren’t just unreasonable, but border on the unconstitutional,” noted Taylor.

NAII and other insurance representatives attended a rule-developing workshop held last Friday in Tallahassee by the Florida Office of Insurance Regulation (OIR). Most reportedly clearly stated their opposition to IDC 03-451, the proposed regulation.

However, the OIR assured attendees that the office would continue to work with the industry to develop a regulation that would satisfy all sides, according to Taylor.

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