Virginia Expected To Enact Restriction On C.L.U.E.
NU Online News Service, Feb. 24, 2:24 p.m. EST?A measure putting restrictions on insurers' use of the claims history data bank C.L.U.E. is likely to gain passage in Virginia, a trade industry group attorney said today.
The prediction concerning a measure that would regulate use of the Comprehensive Loss Underwriting Exchange came from Greg LaCost, counsel for the Des Plaines, Ill.-based National Association of Independent Insurers.
Mr. LaCost also said he expected two bills that would limit use of credit reports in the underwriting of personal lines insurance to be passed by the Virginia legislature and signed into law by the governor as well.
H.B. 1948 would prohibit insurers from using C.L.U.E. reports as the sole basis for an adverse underwriting decision. C.L.U.E. reports are loss history summaries prepared by Alpharetta, Ga.-based Choicepoint and are widely used by homeowners insurers throughout the United States.
Joe Annotti, NAII's vice president of public affairs, said in addition to Virginia, Arizona and California, lawmakers are also debating restrictions on the use of C.L.U.E.
Consumer groups have objected to C.L.U.E. reports because they are linked to the property location and not to the person applying for coverage. So new purchasers of a home can be rejected for insurance based on prior claims for which they were not responsible. (See National Underwriter, February 24, 2003.)
The Virginia bill, before being amended by the state Senate, would have mandated physical inspections of homes before C.L.U.E. loss data could be used for underwriting. The bill now returns to the House for a vote on the amendments. In its original form the bill passed the House unanimously.
"We are trying to educate lawmakers in other states in order to take the wind out of the sails of C.L.U.E. legislation," Mr. Annotti noted.
The other two bills before Virginia legislators (H.B. 2535 and S.B. 1284) would bar insurers from using credit information as the sole basis for an underwriting or rating decision. The bills would permit the use of credit information (as long as it isn't the sole decision-making factor) that is less than 90 days old for new business, and less than 120 days old for renewals.
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