NU Online News Service, Sept. 24, 10:22 a.m.EDT

NATIONAL HARBOR, MD–The nation's insuranceregulators ended their latest look at the use of consumer creditrecords as an underwriting factor by declaring they need moreinformation.

Two officials said insurers have failed to be forthcoming withmaterial during the joint session of two committees of the NationalAssociation of Insurance Commissioners. The panels are due toteleconference again on the issue in a month.

Meeting in a combined session were the Property and CasualtyCommittee/Market Regulation and Consumer Affairs Committee. Thecommittees began looking into credit scoring in March when theyreceived authority to join forces on the issue. Regulators at thatpoint said they wanted more information on the practice and how itis used.

Property and Casualty Committee Chair and Illinois InsuranceDirector Michael McRaith said the committees are in a better placenow than they were in March as far as information obtained andrefining their questions to the insurance industry.

"The charges [of the committees] did not have a time frame,"Director McRaith said after the session, "Our objective isongoing."

He said with each new finding, new questions are raised. "As wereceive information, like any responsible regulator, it will leadto more questions. And as we learn more about this practice, welearn more about the different participants within the industry andwe are looking to get additional answers."

Director McRaith also said the Property and Casualty Committeewill look into marital status as a rating factor in the nearfuture, stating that while it could be argued that credit is areflection of behavior, the use of marital status is more suspectin that regard.

Regarding the state of the joint committee inquiry intoinsurance scores, both Director McRaith and Oklahoma InsuranceCommissioner Kim Holland, who chairs the Market Regulation andConsumer Affairs Committee, expressed frustration with answersprovided by insurers.

Commissioner Holland said during the meeting she needsforthright information from the industry and credit agencies tofully understand the issues, but said respondents have been usingsemantics to avoid direct answers in an attempt to regulate actionsagainst them. "I feel like these conversations go around incircles," she said.

Director McRaith said afterward, "These are the same arguments;the same rhetoric that has been circling one meeting after anotherfor years and years. What we are trying to do is move past therhetoric. That's why this is an effort that is not going to becompleted in a day, or month, or even half a year."

The meeting itself focused largely on whether regulators shouldregulate providers of credit-based insurance scores, such as FICO[Fair Isaac Corporation], as "advisory organizations," an ideaopposed by those providers and the insurance industry.

The insurance score providers develop the scoring models used byinsurance companies.

Industry and insurance scoring provider representatives saidregulators already have access to the models themselves, and arguedthe providers do not qualify as advisory organizations under statelaws.

Birny Birnbaum, executive director of the Austin Texas-basedCenter for Economic Justice consumer group, said the providers areadvisory organizations, but argued that the debate over whethercommissioners should regulate them is a distraction from the realissues surrounding insurance scores.

He said regulators should be more concerned with collectingindependent data on insurers' use of credit information so thatclaims made by the industry can be verified.

But collecting data is the purpose of regulating insurancescoring companies, Director McRaith said. He explained that ifinsurance scoring companies are subject to oversight as advisoryorganizations, regulators can "review them from top to bottom" anddevelop a solid, fact-based understanding of what they do and howthey develop models.

Director McRaith said the committees will hold a conference callin four weeks to discuss specific information that regulators willbe seeking.

Director McRaith said the committees will continue to ask directquestions to the industry, but will also use regulatory authorityto collect desired information from insurance companies.

Both he and Commissioner Holland said the committees will becareful to check with individual state regulators to make sureinsurers are not forced to comply with multiple requests for thesame information.