Florida insurers can expect either new regulation or legislationwill be proposed in the wake of a state hearing as to whether theirauto customer rating process discriminates against minorities, anindustry lobbyist said.

The comments of Florida Insurance Council Vice President GaryLandry followed last Friday's Office of Insurance Regulationhearing on the possible racial impact of education and occupationfactors in underwriting.

Although there are no specific proposals on the issue as of yet,he said that some of the special measures taken at the hearingshould provide evidence of the interest in the issue.

What remains to be seen, however, said Mr. Landry, is whetheraction will take place in the state legislature or in the stateOffice of Insurance Regulation.

"It's unclear what the intent was, whether they want to dosomething regulatory or in the legislature," he said.

"There's no bill that we know of at the moment, but some of thethings at the hearing were a little unusual," said Mr. Landry,noting that there was a court reporter present, state-owned TVcameras and a streaming video of the hearing on the Internet.

Additionally, the OIR said it will issue a report on thefindings of the hearing to members of the state House and Senate,as well as Gov. Charlie Crist and the members of his cabinet. Thatreport, according to OIR spokesman Robert Lotane, will be ready"within a matter of weeks."

In announcing the hearing, the OIR said it was concerned thatrating policyholders based on their education and occupation couldhave an adverse effect on minorities.

Although no lawmakers have contacted the department specificallyabout crafting legislation on the issue, Mr. Lotane said thatstaffers from both the House and Senate were present at thehearing. The state legislature will convene for its regularlegislative session in March.

Given the timing of the report, and the measures taken at thehearing, Mr. Landry speculated that the state legislature would bethe one to take up the issue. "It would appear it's probably goingthat way," he said.

None of the three insurance companies represented at thehearing--AIG, GEICO and Liberty Mutual--said that they collectinformation about race or income status from policyholders, and allthree said they did not know if their practices negatively impactminorities.

However, Robert P. Hartwig, president of the InsuranceInformation Institute, cautioned in testimony at the hearingagainst limiting the ability of insurers to gauge different factorsin setting rates.

"All underwriting factors used by auto insurers--includingoccupation and education--have been actuarially demonstrated toenhance the insurer's ability to predict loss," he said.

New Jersey lawmakers also examined the issue of occupation andeducation rating factors, but Mr. Hartwig noted that the stateapproved an insurer's request to use those factors as part of itsauto insurance underwriting criteria in 2004.

Jeff Brewer, a spokesman for the Property and Casualty InsurersAssociation of America, said the group would work with whoeverdecided to take up the issue to ensure that companies could use themost accurate rating tools possible.

"Other demographic factors that have been approved by stateregulators because they are accurate predictors of futurelosses--factors such as occupation--operate in exactly the samemanner," he said. "Arbitrary restrictions on actuarially justifiedunderwriting factors harm the insurance marketplace by stiflingcompetition and innovation."