INDIANAPOLIS (Jan. 20, 2005)–– The National Association of Mutual Insurance Companies (NAMIC) has opposed a bill supported by the North Dakota Insurance Commissioner that would change the circumstances under which credit-based insurance scoring could be used to more accurately price insurance products.
The commissioner’s proposal, HB 1335, was debated Tuesday in the House Industry, Business and Labor Committee, chaired by State Rep. George J. Keiser.
The bill would redefine an adverse action to include “an action by which an insurer provides a quote or an offer for insurance at less favorable terms than an insurer would have quoted or offered an applicant or insured if the applicant’s or insured’s credit report or credit-based insurance score had been more favorable.”
The bill also defines as an adverse action an action wherein an insurer provides a premium discount based on the applicant’s credit-based insurance score if the discount is not the maximum discount available from the insurer.
NAMIC has told state insurance commissioner Jim Poolman that the additional adverse action language would require a company to eliminate all other underwriting and rating factors but the insurance score to meet the test required by the proposal. There would be no other way for an insurer to identify the impact of an insurance score without isolating the score in the underwriting process. To do so would be a violation of existing state law that requires companies to consider underwriting factors in addition to a credit-based insurance score.
Regarding the discount language, NAMIC questions why an adverse action notice would be necessary for any consumer that receives a discount; this language would create the potential for more rather than less consumer confusion.