NU Online News Service, March 29, 3:38 p.m. EDT

DENVER–Consumer representatives again made their case to insurance regulators about perceived inaccuracies regarding insurers' use of credit-based insurance scores as a factor in determining rates.

Their comments came at the National Association of Insurance Commissioners (NAIC) Spring National Meeting held here.

Sonja Larkin-Thorne, a Connecticut-based consumer advocate who formerly worked in the insurance industry, argued during the NAIC/Consumer Liaison meeting that even lenders are now beginning to question the accuracy of credit scores after the large numbers of recent defaults.

She noted a USA Today report last year that consumers who have never been late on payments are being hit with lower credit scores as lenders react to the economic downturn by closing credit card accounts and reducing limits.

Ms. Larkin-Thorne said if credit scores can drop even for consumers who have made no late payments and done nothing wrong, then that raises questions on whether the credit scoring model is flawed.

Pointing out how the current recession has impacted credit scores, Ms. Larkin-Thorne said that between the 2007 fourth quarter and the 2008 fourth quarter, median credit scores in the U.S. dropped five points.

Certain regions, though, have been hit harder, she noted. She said Riverside, Calif., for example, has seen median scores drop 17 points in that time. Scores also dropped 14 points in Phoenix and 12 points in Miami.

This data, Ms. Larkin-Thorne said, shows that credit scores represent only a "point in time" and should not be relied upon as much as they currently are by lenders and insurers.

"Credit scores aren't as accurate as they used to be, but more importantly, maybe never were," Ms. Larkin-Thorne said.

David Snyder, American Insurance Association vice president and associate general counsel, said while Ms. Larkin-Thorne's statistics may all be true, lending scores are not the same as insurance scores. Insurance scores, he said, are calculated differently.

He said there is no evidence that insurance scores have dropped in the same manner as lending scores, and he noted that there has been no rise in consumer complaints over insurance scores.

For their part, regulators intend to move ahead with a planned data call in order to obtain accurate information on the practice of credit-based insurance scores, Illinois Insurance Director Michael McRaith said at the NAIC's Property and Casualty Committee meeting.

The information, he said, will be used to provide accurate data to federal and state lawmakers when necessary. The data call is listed in the proposed 2010 charges for the committee, and the proposed deadline for collecting the information is Sept. 2010.

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