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Florida: Judge Rules for Insurers in On-Going Legal Challenge to Credit Rule

In a victory for insurers, a Florida administrative law judge ruled Sept. 5 that the state's Office of Insurance Regulation (OIR) does not have the authority to begin enforcing a rule governing insurers’ use of credit information when that rule is still under administrative challenge. The judge’s order prevents OIR from enforcement of the rule, scheduled to go into effect Sept.1. The challenge to the substance of the credit rule, filed by the American Insurance Association, Florida Insurance Council, National Association of Mutual Insurance Companies, and Property Casualty Insurers Association of America, will continue.

“The order confirms FIC’s position that the Memorandum is itself a rule as defined in the Administrative Law Code of Florida, and as such, must be promulgated as a rule in order to be enforceable. Since it has not been so promulgated, the Order directs that OIR shall immediately discontinue reliance on the Memorandum,” said Guy Marvin, President, Florida Insurance Council.

This order results from the industry’s challenge to OIR’s January 2006 Informational Memorandum announcing that enforcement of the rule would commence Sept. 1. In yesterday’s order, the administrative law judge found that the Informational Memorandum, in order to be enforceable, must be promulgated as a rule, which it was not. Thus, the rule cannot be enforced until the underlying legal challenge of the rule itself is resolved. A decision on the rule is expected by the end of the year.

The history of insurers’ fight to use credit information in underwriting and rating Florida homeowners’ and auto policies is a long one. After the legislature passed a law in 2003 specifically authorizing the use of credit, OIR’s subsequent rule administering the law went far beyond the letter and intent of the law in the requirements it placed on insurers. The industry legal challenge of the regulation followed.

Source: NAMIC, American Insurance Association, Property Casualty Insurance Association of American, and Florida Insurance Council joint news release

Posted: Thursday, September 07, 2006 12:00:00 AM. Modified: Thursday, September 07, 2006 11:35:55 PM.

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