Legislators Scrutinize Insurance Claim Databanks
By Steve Tuckey
NU Online News Service July 20, 1:07 p.m. EDT?Insurance industry and vendor representatives defended the use of homeowners' loss databases at a forum last week sponsored by the National Conference of Insurance Legislators.[@@]
The state lawmakers group, which met in Chicago, is considering developing model laws dealing with the issue that has aroused concern among regulators and consumers around the nation.
Rey Becker, vice president of the Property Casualty Insurers Association of America, based in Des Plaines, Ill., warned the NCOIL lawmakers that any new laws impeding use of such databases or the data itself could backfire on the consumers.
"Advances in technology have streamlined this process, making this exchange of information much more expedient and allowing insurers to price their products more accurately," he said. "This benefits home buyers, home sellers, realtors and insurers."
Jeffrey Skelton, assistant vice president for ChoicePoint, defended the workings of the Comprehensive Loss Underwriting Exchange (CLUE), which some regulators and consumer activists have targeted for concern as to its standards for collecting and tracking data.
While only six states so far have taken any regulatory action in regard to CLUE, more action could be on the way.
CLUE is actually a proprietary database of ChoicePoint while a competitor, the Insurance Services Office, puts out its Automated Property Loss Underwriting System (A-Plus).
Separating the issues of how the loss data is collected and how it is used can be difficult at times, ChoicePoint and ISO officials said.
ChoicePoint's Mr. Skelton said that simple inquiries from policyholders are no longer items that are accepted into the CLUE database.
But Mr. Skelton said the issue of filing data concerning those cases that are closed without payments, known in the trade as CWOPS, is less clear cut.
"Not all CWOPS are created equal," Mr. Skelton said, noting that sometimes claims are opened with an adjuster on the scene and then without apparent reason closed, leading in some instances to a suspicion of fraudulent activity.
Birny Birnbaum, director of the Center for Economic Justice, said that the problem of databases such as CLUE and A-PLUS bespeaks a much bigger problem as more and more of them are developed.
"Everyone agrees that mere inquiries should not be used. So I think it is fair to ask why they have been used all this time up until now," he said.
Mr. Becker warned against legislative and regulatory solutions that no matter how well intentioned could end up backfiring on those they are supposed to help.
"If customers have the belief they are being treated unfairly, they can always shop around," he said.
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