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P/C Trades Urge Federal Regulators to Design Credit Study as Accurately as Possible

WASHINGTON D.C. (Aug. 20, 2004) - The three major, national property/casualty insurance trade associations recently submitted formal comments to the Federal Trade Commission (FTC) and the Board of Governors of the Federal Reserve System (Board) regarding their study on the effects of credit-based insurance scores. The study was mandated by the Fair and Accurate Credit Transactions Act of 2003.

The American Insurance Association (AIA), National Association of Mutual Insurance Companies (NAMIC), and the Property Casualty Insurers Association of America (PCI) urged the FTC and the Board to design the study so that it is as accurate as possible.

The trades provided the FTC and the Board with technical comments regarding the methodology and research design for conducting the study noting that it is critical that the methodology to be used and the standards to be applied be understood at the outset. Ideally, the trades said, the study would use correct demographic information for each individual policyholder in order to give maximum integrity to the results. However, since it is unlikely that many of the classes protected by the Equal Credit Opportunity Act will be able to be identified on an individual basis with aggregate data, the study risks being oversimplified and inaccurate.

Therefore, the trades also stressed the importance of careful consideration of mitigating problems - given the limitations on the data - associated with a likely imperfect study methodology. The trades have all pledged to continue working closely and collaboratively with the FTC and the Board on this study, which is tentatively scheduled to be completed and submitted to Congress by the end of 2005.

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For further information contact:
Robert Detlefsen at rdetlefsen@namic.org
or (317) 875-5250