The National Conference of Insurance Legislators has added adrafting note to their credit scoring model law allowing insurersto allow for customers' “extraordinary life circumstances” whenusing credit records to underwrite and rate personal linespolicies.

State lawmakers approved the addition to the model law at thegroup's annual spring meeting last week in Fort Lauderdale,Fla.

NCOIL claims that more than half of the states have adoptedeither the NCOIL model or a provision very similar to it to quellsome of the controversy that has resulted from the widespread useof credit scores by personal lines carriers in underwriting andrating policies.

By adding the co-called “extraordinary life circumstance”drafting note, the lawmakers hoped to respond to critics who feltthat policyholders should not be penalized when they either losejob or suffer the effects of a natural catastrophe.

Neal Alldredge, senior state advocacy director for the NationalAssociation of Mutual Insurance Companies, said that in thosestates that have adopted the provision there have been no problemsor abuse of the privilege reported.

The lawmakers decided to leave it up to the states to enumeratewhat circumstances should be considered extraordinary enough tomerit a closer look by insurers of credit scores when ratingpolicies.

While the proposal by consumer advocate Birny Birnbaum to exemptresidents from disaster area counties from credit scoringprovisions gained no traction in the states, Mr. Alldredge saidthat natural catastrophe damage would be a logical extraordinarylife event.

A total of seven states–Colorado, Florida, Louisiana, Montana,New Mexico, Texas and Virginia–have incorporated extraordinary lifecircumstances provisions into their models, according to NCOIL.