NAII States Political Muscle Moves Ind. Scoring Bill

According to the National Association of Independent Insurers (NAII) political maneuvering is keeping alive a burdensome and counterproductive bill that would require Indiana insurers to obtain prior approval of credit-based insurance score forumulas and force a three-year review of credit history.

Rep. David Crooks (D-Washington), who chairs the House Insurance, Corporations and Small Business Committee, amended Senate Bill 276 to include similar language in a bill he introduced in the House. Crooks’ bill, HB 1164, is being held in the Senate Insurance and Financial Institutions Committee, whose chairperson has said he will not give the bill a hearing.

Likewise, Crooks said he will not call SB 409-a slightly toned-down version of HB 1164-for a vote in his committee. “This type of political posturing doesn’t benefit companies or consumers,” said NAII Counsel Robert Hurns. “Imposing unfair restrictions on the use of insurance scores will force many insurers to significantly increase premiums for a majority of their consumers and make the Indiana marketplace less attractive to these companies.”

SB 276, which passed the House committee in a 7-3 vote Feb. 19, grafts insurance scoring language onto provisions that require annual actuarial studies of the Indiana Health Insurance Association’s high-risk pool. The insurance scoring provisions:

Require insurance carriers to submit their scoring models for approval from the Indiana Department of Insurance to continue or begin using insurance scoring in underwriting, which runs contrary to the state’s current file-and-use filing practices.

Prohibit insurers from using credit information if a consumer has a clean driving record and hasn’t submitted any claims during the previous three years.

Mandate that consumers with no credit history be considered neutral-even though studies show these individuals file more claims.

Ban the sole use of insurance scoring for issuing, renewing or canceling a policy.

Force insurers to provide a list of all factors in an individual’s credit history that led to a cancellation, non-renewal or an increase in rates.

“Credit should not be treated differently from any other rating and underwriting criteria, especially when this underwriting tool is a proven fair and objective method of predicting future losses,” Hurns said. “Insurance scores help ensure that policyholders pay premiums that accurately reflect their risk.

For a significant majority of people, responsible use of credit actually means lower auto and homeowner insurance rates, more choices and better coverage.”

All second and third reading of bills in the full House and Senate are due this week.