NU Online News Service, July 16, 3:43 p.m. EDT
The National Conference of Insurance Legislators has amended its model credit scoring legislation to require that insurers give a break to people hit by extraordinary events such as job loss and serious illness.
Under the change, carriers would have to provide an exemption taking into account unusual financial impacts from “extraordinary life circumstances,” particularly with respect to the fallout from the current economic crisis, when rating customers.
The change moves the extraordinary life circumstances provision from a drafting note into the body of the model law, which was originally adopted by NCOIL in 2002, and has been adopted by 26 states since then. The NCOIL Executive Committee approved the change last weekend at the group’s Summer Meeting in Philadelphia.
According to Susan Nolan, executive director of NCOIL, drafting notes provide guidance, but do not carry the weight of text within the body of a model.
The amendment would apply to those who experience serious illness or injury; death of a spouse, child or parent; divorce; identity theft; temporary loss of employment; or military deployment.
For applicants or insureds who experience an extraordinary event impacting their credit record who file a written request, carriers will be required to provide an exemption from “rates, rating classifications, company or tier placement, or underwriting rules or guidelines.”
Ms. Nolan said NCOIL legislators wanted to make sure there was a provision in the model to protect people who have been affected by the current financial crisis.
NCOIL said insurance company and agent representatives supported the revision.
Deirdre Manna, vice president regulatory, industry and political affairs for the Property Casualty Insurers Association of America, said, “The amendment provides maximum protection for consumers beset by extraordinary life circumstances that negatively affect their credit standing while simultaneously affording insurance companies maximum flexibility in how they respond to such consumers. Insurers recognize that individuals encounter unforeseen or unexpected life circumstances.”
She noted that about 11 states have already adopted some form of extraordinary life circumstances protection already.