SAN DIEGO (March 16, 2009) - The National Association of Insurance Commissioners (NAIC) today adopted a proposal to review the use of credit-based insurance scoring. The NAIC will convene a public hearing to take testimony on:

  • What is a credit-based insurance score?
  • How does the insurance industry use credit-based insurance scores for pricing and underwriting?
  • What is the impact on policyholder premium from credit-based insurance scores in light of the current economic conditions?

"This is a critical issue for the NAIC to consider as part of the 2009 consumer liaison agenda," said New Mexico Insurance Superintendent Morris J. (Mo) Chavez, who chairs the NAIC/Consumer Liaison Committee. "In this challenging economy, it is essential that insurance regulators have the necessary tools to prevent collapsing credit markets from unfairly impacting consumers."

Proponents for the use of credit-based insurance scores argue that they are predictive of an insured's future claims experience, and are necessary tools for underwriting and/or rating. Critics argue that the use of credit-based insurance scores unfairly discriminate against lower-income individuals and some protected classes of people.

Forty-eight states have taken some form of legislative or regulatory action limiting the use of credit-based insurance scores, including:

  • Some states have limited the use of credit-based insurance scoring, requiring that it not be the sole rating factor used by insurers to evaluate risk.
  • Some states believe that the process itself is not intended to be discriminatory, and any disparate impact based on race or ethnicity is merely coincidental.
  • Some states believe that a majority of policyholders benefit from the use of credit scoring.
  • Some states have taken issue with the use of credit scores and other rating criteria, such as occupation and education.
  • Some states prohibit the use of credit-based insurance scores.

More details about the public hearing will be posted to once they are finalized.

About the NAIC

Formed in 1871, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories. The NAIC has three offices: Executive Office, Washington, D.C.; Central Office, Kansas City, Mo.; and Securities Valuation Office, New York City. The NAIC serves the needs of consumers and the industry, with an overriding objective of supporting state insurance regulators as they protect consumers and maintain the financial stability of the insurance marketplace. For more information, visit

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