Florida insurers can expect either new regulation or legislation will be proposed in the wake of a state hearing as to whether their auto customer rating process discriminates against minorities, an industry lobbyist said.

The comments of Florida Insurance Council Vice President Gary Landry followed last Friday's Office of Insurance Regulation hearing on the possible racial impact of education and occupation factors 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 hearing should provide evidence of the interest in the issue.

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

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

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

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

In announcing the hearing, the OIR said it was concerned that rating policyholders based on their education and occupation could have an adverse effect on minorities.

Although no lawmakers have contacted the department specifically about crafting legislation on the issue, Mr. Lotane said that staffers from both the House and Senate were present at the hearing. The state legislature will convene for its regular legislative session in March.

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

None of the three insurance companies represented at the hearing--AIG, GEICO and Liberty Mutual--said that they collect information about race or income status from policyholders, and all three said they did not know if their practices negatively impact minorities.

However, Robert P. Hartwig, president of the Insurance Information Institute, cautioned in testimony at the hearing against limiting the ability of insurers to gauge different factors in setting rates.

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

New Jersey lawmakers also examined the issue of occupation and education rating factors, but Mr. Hartwig noted that the state approved an insurer's request to use those factors as part of its auto insurance underwriting criteria in 2004.

Jeff Brewer, a spokesman for the Property and Casualty Insurers Association of America, said the group would work with whoever decided to take up the issue to ensure that companies could use the most accurate rating tools possible.

"Other demographic factors that have been approved by state regulators because they are accurate predictors of future losses--factors such as occupation--operate in exactly the same manner," he said. "Arbitrary restrictions on actuarially justified underwriting factors harm the insurance marketplace by stifling competition and innovation."

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Fla. Racial Impact Hearing May Spur Insurance Legislation

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