Alliance Supports N.H. Credit Scoring Rule

The Downers Grove, Ill.-based trade group said it believes that the proposed regulation "is far more reasonable and workable for insurers than previously proposed versions."

Currently, New Hampshire law prohibits insurers from charging a higher premium for automobile or homeowners insurance based solely on an individual's credit rating or history.

The law also requires that any use of credit reports for underwriting or rating purposes be based on objective, documented and measurable standards. Insurers also must provide notice to the applicant or policyholder if credit information is to be considered in underwriting.

The insurance department began drafting rules early this year. After the industry strongly objected to an early draft of the rule, the department revised it.

But in the Alliance's view, the finalized version sent to the Joint Legislative Committee on Administrative Rules in April "was even more onerous than the earlier draft."

The April version required written authorization from the applicant or insured each time the insurer sought to obtain a credit report or insurance score.

Under pressure from the industry –primarily because the prior-consent requirement was added after the public hearing– the department withdrew the regulation and agreed to re-draft it.

The Alliance said that it opposes actions that limit an insurer's ability to underwrite or competitively rate their business.

However, the group has stressed its agreement with statutory or regulatory language that would limit the use of a credit or insurance score as the sole factor in an adverse underwriting or rating decision.

After attending a department hearing on the proposal, the Alliance submitted written comment generally in support of the proposal. However, the group also included the following comments:

? Regarding the obligation to recheck a credit or an insurance score every three years, the Alliance asked for a clarification to provide that the recheck will not be mandated if the insurer obtains a credit history or insurance score only at the time of new business.

? The Alliance suggested the filing-requirement provisions be clarified to state that third-party vendors may file models with the department for approval and that companies relying on those models may then refer to them in their underwriting and/or rate filing.

The Insurance Department's public hearing on the proposed rule took place Dec. 13, while Dec. 28 was the last day for receiving written comment on the proposal from interested parties.

A department spokesperson said the department has 150 days to decide whether the final proposal will be in its original form or amended based on the information received from the public.

The spokesperson anticipated that the department will then forward its final version to the Joint Legislative Committee on Administrative Rules in February or March for the scheduling of another public hearing.