Insurance regulators debate credit scoring
The National Association of Insurance Commissioners NAIC) held hearings this week on the issue of how insurance companies use consumer credit scores to determine risk and price insurance premiums.
The National Association of Insurance Commissioners NAIC) held hearings this week on the issue of how insurance companies use consumer credit scores to determine risk and price insurance premiums.
The National Conference of Insurance Legislators NCOIL) – an organization of state legislators advocating for state-level regulation – told the regulatory group in a letter that insurance companies should consider the impact of the recession on consumer credit.
NCOIL offered its own model for use of credit scores and said it desires a “balanced public policy that safeguards our constituents from possible abuse.”
Consumer groups have pointed to a pair of studies that they say show use of credit scores to determine the cost of auto insurance and other insurance premiums discriminates against low income and minority consumers.
Insurance companies have argued that credit scores are a good predictor of risk and lead to better underwriting practices.
Robert P. Hartwig, president of the Insurance Information Institute, defended insurance industry underwriting practices as fair and accurate.
Hartwig said the “silver lining” of the recession is that it will help encourage Americans to reduce their debts, according to a report from National Underwriter.
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Posted: May 01, 2009
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