The New Jersey Senate’s Commerce Committee will hold a hearing this Thursday on legislation filed by the panel’s chair to prohibit the use of credit-based insurance scoring through June 2011.
NAMIC will offer testimony in opposition to the bill, stressing to lawmakers the consumer benefits of insurers’ use of insurance scoring, the continued validity of insurance scoring during the economic crisis, and the unfairness of depriving consumers the opportunity to benefit from continued use of insurance scoring.
The bill, SB-2766, contains a single, straightforward substantive provision, as follows:
“Notwithstanding any other law to the contrary, an insurer shall not use insurance scoring in rate-making … for any personal lines insurance coverage delivered, issued, executed or renewed in this State, or approved for issuance or renewal in this State by the commissioner, on or after the first day of the third month next following the effective date of this section and until June 30, 2011. As used in this section, 'insurance scoring' means a number or rating that is derived from an algorithm, computer application, model, or other process that is based in whole or in part on credit information for the purpose of establishing the measure of exposure for insurance loss represented by an applicant or insured.”
Presumably, given the temporary nature of the prohibition, the proposal is based on misconceptions regarding the effects of insurance scoring during the economic crisis. NAMIC will work with the Insurance Council of New Jersey and others to provide committee members with materials countering such misconceptions, including NAMIC’s recently released Policy Briefing, “Credit-Based Insurance Scoring: Separating Facts From Fallacies.”
Direct questions and comments to NAMIC State Affairs Manager Paul Tetrault.
Posted: Monday, May 04, 2009 12:00:00 AM. Modified: Monday, May 04, 2009 9:15:26 AM.
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