Insurer Group Challenges California C.L.U.E. Regs
By Gary Mogel
NU Online News Service, Aug. 5, 1:09 p.m. EDT?An insurer trade group is mounting a court challenge to California regulations limiting the use of prior loss history obtained from Comprehensive Loss Underwriting Exchange reports.
The Association of California Insurance Companies, based in Sacramento, is challenging the state insurance department's emergency regulation on loss history information that took affect on July 23. The California Court of Appeals will hear arguments on the emergency regulation Aug. 22, according to ACIC.
ACIC contends that the department of insurance does not have the statutory authority to impose the restrictions on homeowners insurance underwriting and rating detailed in the emergency regulation, said Joe Annotti.
Mr. Annotti is vice president of public affairs of the Des Plaines, Ill.-based National Association of Independent Insurers, of which ACIC is an affiliate.
In addition, ACIC contends that no emergency exists to justify the adoption of the regulation, and that in any event CLUE reports are valid underwriting and rating tools. ACIC has issued a fact sheet detailing what is says are the legitimate purposes and uses of such reports.
At least one insurer, Seattle, Wash.-based Safeco Corporation, has decided to temporarily stop writing new homeowners insurance policies in California, partly based on the burdens imposed by the new regulations.
"The emergency regs would limit our ability to use prior losses on a going-forward basis," according to Mike LaRocco, president of Safeco Personal Lines. He said that the regulations would bar the company from factoring loss history into the homeowners underwriting and rating process.
C.L.U.E. reports are location-specific homeowners loss reports produced by Alpharetta, Ga.-based ChoicePoint. Several consumer and policyholder groups have charged that the reports unfairly impede homeowners and home buyers from obtaining insurance because information about repaired damage and mere claim inquiries that result in no payment appear in the reports.
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