NU Online News Service, March 29, 2:38 p.m. EDT

DENVER–A first step toward a model law to regulate sellers of credit scoring products used by insurers has been taken by the National Association of Insurance Commissioners.

An NAIC committee meeting here last week approved a request to develop legislation to regulate insurance scoring vendors with the aim of establishing oversight and examination of entities that provide information used by insurers in both pricing and underwriting.

The subject was voted on by the Property and Casualty Committee at the NAIC's Spring National Meeting held here, but Illinois Insurance Director Michael McRaith, who chairs the committee, noted that development of a model law would require the approval of the Executive Committee/Plenary.

Director McRaith explained that insurance scoring vendors said during a hearing the Property and Casualty Committee held last year that they did not believe they were subject to oversight by regulators, but that they would welcome that oversight.

"We are going to accept that invitation, and we look forward to developing a model law," Director McRaith said.

According to the model law request, "These vendors are not currently subject to regulation even though the information they provide to insurers is used to establish price, eligibility and coverage limitations in ways similar to the development of advisory loss costs by advisory organizations. The model law would provide a regulatory framework for licensing and oversight of insurance scoring vendors."

Dave Snyder, American Insurance Association (AIA) associate vice president and general counsel, told the committee that regulators should discuss this matter with the vendors to determine what information regulators feel they are not getting. He said there may be ways to address the perceived problems through an information exchange.

"Going all the way to licensing [the vendors] as an advisory organization is a pretty steep step," he said.

None of the vendors were present at the committee meeting to offer their perspective to regulators.

But when that point was brought up, Director McRaith said the vendors were "pretty clear" at the 2009 hearing that they would welcome oversight.

Director McRaith said working on the model law would go through a conventional process that would be open and transparent. "But we intend to move forward quickly and will try to have something completed this calendar year," he said.

Special Reports /

Credit Scoring Schemes May Get Regulation Measure

Related Stories

Recommended For You