Posted: 9/30/2010

NAMIC Questions Need for NAIC Data Call Initiative

The following statement may be attributed to Neil Alldredge, senior vice president for State & Policy Affairs for the National Association of Mutual Insurance Companies, on the hearing held today at the National Association of Insurance Commissioners on its proposal for a Risk Classification Data Call currently under consideration. The initiative would enact a data call to gather information on the impact of credit-based insurance scoring and other rating factors on insurance premiums.

“NAMIC is completely opposed to this data collection exercise developed by the NAIC. Simply, it is too expansive, costly, and misguided to justify.

“We have many questions about this initiative, including has the NAIC or any regulatory staff calculated the cost of compliance with the data call; what will the data call provide above and beyond already available information that can be found in rate filings; what will be done with the data; and what confidentiality safeguards are in place. These questions, particularly those related to cost benefit, need to be addressed before the data call proceeds.

“The issue of credit-based insurance scoring is one of the most studied and regulated tools currently used by insurers. There have been 19 industry, government, and academic studies on this issue, all with similar findings – credit-based insurance scoring is a fair and equitable underwriting tool to predict risk. To date, 47 states regulate the practice, and consumers are not complaining to regulators. This circumstance begs the question of the need for yet another expensive exercise of data collection.

“NAMIC believes this effort will benefit neither consumers nor regulators. It is too costly, ignores reality, and will produce a mountain of information that is virtually unusable. While this proposal examines more than the issue of credit-based insurance scoring, it is clearly about credit-based insurance scoring ultimately.”

Contact: Lisa Floreancig
Director of Communications
State & Policy Affairs
National Association of Mutual Insurance Companies
317-876-4246
lfloreancig@namic.org