FOR IMMEDIATE RELEASE

NAIC TESTIFIES ON IMPACT OF INSURERS' USE OF CREDIT-BASED SCORES
Regulators Developing Multi-State Data Call, Undertake Comprehensive Review

WASHINGTON, D.C. (May 12, 2010) — The use of credit scores in personal lines of insurance bear close examination, the National Association of Insurance Commissioners (NAIC) told Congress today.

Testifying today before the House Subcommittee on Financial Institutions and Consumer Credit, Illinois Insurance Director Michael T. McRaith stressed the need for clarity and comprehension when insurance companies use consumers' credit scores to determine eligibility and rates. McRaith indicated that the vast majority of states have taken some legislative or regulatory action to address the use of credit scores, but regulators are pursuing more insight into the variety and relative importance of the factors that comprise credit-based insurance scores.

"There are a variety of views on the use of credit scores, but state insurance regulators are interested in providing factual information to this public policy debate," said McRaith, who is Chair of the NAIC Property and Casualty Committee. "To better protect consumers, regulators are conducting a multi-state data call to collect how rates are developed, the variables involved in determining an insurance score and the weight assigned to each variable. The results of a broader multi-state survey will be compiled, evaluated and published to inform policymakers about actual consumer impacts."

The NAIC is developing a voluntary data call for state insurance departments to issue to personal lines auto carriers to obtain information from the companies regarding the development of credit-based insurance scores and the range of premium differences among consumers based on their scores.

The multi-state data call, to be issued within 60 days and completed, aggregated and reported by the end of 2010, will afford policymakers in Congress and the states the opportunity to compare state laws and consumer impact. 

McRaith also indicated that the NAIC is developing a model law to clarify that credit- based insurance score vendors should be within the scope of insurance regulator oversight.
 

Click HERE to view Director McRaith's full testimony.

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 www.naic.org.

You are currently subscribed to the “NAIC News Release” electronic service. For information regarding this service, please contact the NAIC Communications Division, 2301 McGee Street, Kansas City, MO 64108, 816-783-8909.

To unsubscribe from NAIC Electronic Services, send a blank e-mail to
NAIC Opt Out services.