Ark. DOI Credit Directive Captures Insurer Attention

The National Association of Independent Insurers (NAII) announced that insurers are weighing the ramifications of a directive filed by the Arkansas Department of Insurance that amends the requirements for insurers using credit-based insurance scores for personal lines rating and underwriting.

“The insurance industry has worked closely with the Arkansas DOI on this issue, and we’re confident that we can continue that work to develop a satisfactory compromise between consumers, the DOI and the insurance industry,” said NAII counsel Jim Taylor.

The Amended Requirements for Insurers Using Consumer Reports or Credit Scoring contains definitions on consumer reports, applicants, and adverse action. Among its provisions, the directive:
• Prohibits insurers from refusing to issue, renew or limit coverage based solely on credit information;
• Establishes consumer notification provisions about the use of credit scoring;
• Requires forms and credit scoring information to be filed with the Department of Insurance;
• Requires the DOI to keep consumer report scoring systems confidential;
• Prohibits consumer report scoring systems from being incorporated into any other filing by a non-affiliate of the insurer;
• Establishes other insurer notification requirements.

Because this document is a directive and not filed as a proposed regulation, no hearing is required, Taylor noted. Under the terms of the directive, insurers must comply with its requirements by January 1, 2003. NAII will be meeting with the Arkansas DOI to review the directive and discuss any areas of concern which may exist, including the implementation date, Taylor added.

“The fact that legislators just adopted a credit scoring model act at the annual NCOIL meeting is a positive indication that lawmakers, regulators and the industry can find common ground on the credit issue,” Taylor said. “When it’s done responsibly, the use of credit scoring creates a competitive market where insurers write more business and most consumers reap the benefits by paying less for insurance.”

Topics Carriers