SCORING, TERRITORIAL RATING STUDIED:

At the recent Texas Department of Insurance (TDI) hearing on insurance scoring and territorial rating rules, insurers expressed their support for proposals they believe will ensure consumers are charged premiums that reflect their risk characteristics, according to the National Association of Independent Insurers. “The rules as currently proposed represent a well reasoned approach to regulation of the insurance industry in these areas,” said Donald Hanson, NAII southwestern regional manager. “Both insurance scores and territorial rating are based on the bedrock principles of risk-based pricing and fairness. Rates should be based on the risk exposure.” All Texas insurers who use insurance scoring in their underwriting practices were required to file their models with TDI in September 2003. The department has been reviewing those models to determine if they are in compliance with Senate Bill 14 and, ultimately, based on sound actuarial practices. TDI is expected to finalize the rules on both insurance scoring and territorial rating by the end of the year.