INDIANAPOLIS (Oct. 9, 2007) – Promulgation of final regulations for transitioning Massachusetts to a competitive auto insurance market represents significant progress despite the fact the Division of Insurance is temporarily prohibiting the use of credit information in underwriting as well as rating, according to the National Association of Mutual Insurance Companies (NAMIC).
“By temporarily prohibiting the use of credit information in underwriting as well as rating, Commissioner Nonnie Burnes is apparently doing what she intended when she first promulgated the regulations, putting the issue aside to work on the transition to competition,” commented Paul Tetrault, NAMIC’s Northeast state affairs manager. “She has indicated that there will be an opportunity to fully consider the benefits of using credit information and every indication is that she will be open minded when that occurs. We believe strongly that a full and thoughtful consideration of the issue results in a conclusion that the use of credit information is beneficial for most consumers. This is what balanced studies have shown.”
The originally proposed version of the regulations included a prohibition on the use of credit information in rating, but not underwriting, and Burnes indicated that she intended to consider the issue fully during the first year of transitioning to competition. But in the final version of the regulations issued Oct. 5, such use is prohibited for underwriting as well. Burnes explained the basis for her change in position in a letter issued concurrently with the regulations.
Tetrault pointed out that states across the country have debated the issue of insurers using credit information, and the vast majority have concluded that allowing such use is sound public policy. Given the high level of concern among some in the Legislature, it may be appropriate to consider legislation such as the National Conference of Insurance Legislators Model Act, he said, noting that 28 states have enacted some version of the NCOIL model.
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Posted: Tuesday, October 09, 2007 12:00:00 AM. Modified: Tuesday, October 09, 2007 3:35:40 PM.
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