Kentucky: NAMIC Comments on Credit-based Insurance Scoring, Special Session Set on Energy

During the June 26 Interim Joint Committee on Banking & Insurance hearing on the issue of credit-based insurance scoring, NAMIC presented testimony via its state trade partner, the Insurance Institute of Kentucky, on the impact of credit scoring on consumers.

"Every study has shown that credit information is highly correlated with risk of loss. Banning credit-based insurance scoring, an actuarially valid underwriting tool, would undermine the very foundation of risk-based underwriting and pricing of insurance,” commented Tami Stanton, NAMIC Central Region state affairs manager. “The study completed by the Arkansas Department of Insurance in September 2006 showed that 35.7 percent of the consumers had their premiums decreased, 53.5 percent saw no change in their premiums, and only 10.8 percent had their premiums increased."

The IIK reports the general consensus of the legislative interim committee was to allow insurers to continue utilizing credit-based insurance scoring in underwriting. Additionally, the IIK noted Kentucky Office of Insurance Executive Director Julie McPeak defended the practice of using insurance scoring in specific, but more generally cautioned the committee to avoid the practice of legislating underwriting practices.

In other news, the IIK said Gov. Ernie Fletcher has called the General Assembly into a special session July 5, likely limited to addressing energy issues and related tax incentives.

Direct questions to NAMIC State Affairs Manager Tami Stanton.

Posted: Tuesday, July 03, 2007 12:00:00 AM.

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We are 1,400 property/casualty insurance companies serving more than 135 million auto, home and business policyholders, with more than $196 billion in premiums accounting for 50 percent of the automobile/homeowners market and 31 percent of the business insurance market. We are the largest and most diverse property/casualty trade association in the country, with regional and local mutual insurance companies on main streets across America joining many of the country’s largest national insurers who also call NAMIC their home. More than 200,000 people are employed by NAMIC members.