Florida Regulator Accused of Flaunting Law in Credit Rule

The Florida Office of Insurance Regulation is making an end run around Florida law by seeking to implement a credit-based insurance scoring rule that is currently being challenged in state court, according to the Property Casualty Insurers Association of America.

The OIR notified insurers that it intends to enforce the provisions of the controversial rule effective Sept. 1. The rule was originally proposed in 2004 to implement the provisions of legislation enacted in 2003 that is based on the National Conference of Insurance Legislators model insurance scoring act.

PCI says the Florida proposal goes beyond the law by requiring insurers to document the effects of insurance against demographic information not collected by, or available to, insurers.

In March 2005, PCI, and other insurance trade associations, filed suit against the Department of Financial Services, Office of Insurance Regulation and the Financial Services Commission. The petition challenged the specific provisions of the rule as contrary to statute, and also maintained that, following reorganization of the Department of Financial Services, the OIR relied on a statute for promulgating the rule that did not give the OIR the authority to do so.

“This is an illegal act that is unenforceable,” William Stander, PCI assistant vice president and regional manager, charged. “It is a sad day when the state’s regulatory body flaunts the authority of the legal system and runs roughshod over due process rights. We will do everything possible to prevent them from enforcing this illegal rule.”

Florida’s law is in the mainstream regarding how states regulate insurers’ use of credit information. But with the OIR interpretation, Florida is in essence banning insurance scoring by making compliance extraordinarily difficult, if not impossible, according to insurers.

The rule would require insurers to demonstrate that the use of the credit-based information does not have a disproportionate effect on “persons of any race, color, religion, marital status, age, gender, income, national origin, or place of residence.”

Source: Property Casualty Insurers Association of America