Judge Strikes Down Emergency CLUE Regs
NU Online News Service, August 27, 10:33 a.m. EDT?A California judge has ruled that the state insurance commissioner exceeded his authority when he issued emergency regulations prohibiting insurers from using Comprehensive Loss Underwriting Exchange (CLUE) reports in homeowners insurance underwriting and rating.
Judge Raymond Cadie of the California Superior Court in Sacramento ruled that there was no emergency justifying the regulations and that Commissioner John Garamendi should have used the legislative process to regulate CLUE.
Jerry Davies, director of communications for the Sacramento-based Personal Insurance Federation of California, noted that the commissioner previously had backed legislation (S.B. 64), introduced by state Sen. Jackie Speier, D-Hillsborough, that would have given him the authority to regulate CLUE. "That bill was defeated in the Assembly's insurance committee," Mr. Davies said.
Mr. Garamendi decried the judge's decision in a press release stating that he will "call for legislation to enact laws that provide consumers with these much needed protections."
The release cited instances in which homeowners were forced to accept higher deductibles or non-renewals after making claim and coverage inquiries. Mr. Garamendi called insurers' alleged misuse of CLUE and similar reports "outrageous, abusive, unfair and discriminatory."
The state Department of Insurance issued the emergency regulations following complaints by policyholders and consumer groups that insurers were denying coverage or increasing premiums based on the claims data in CLUE reports, even though the data often consisted of mere claim inquiries or policyholder questions about coverage.
Insurers and their trade groups, on the other hand, called the emergency regulations an unlawful intrusion on their internal underwriting and rating processes.
CLUE reports are produced by Alpharetta, Ga.-based ChoicePoint, which maintains an address-specific database of claims made for damage to homes throughout the country.
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