NCOIL Puts Off Loss History Model Curbs

Representatives of the property-casualty industry raised strong objections to the proposal last Thursday at NCOIL's annual meeting in Duck Key, Fla., arguing the model goes well beyond anything that is currently on the books in limiting the use of loss history data.

Neil Alldredge, director of state affairs for the National Association of Mutual Insurance Companies, likened the measure to "killing a fly with a sledgehammer."

"While there have been concerns raised in some corners about the use of claims history, there is little or no evidence of market disruption that would justify the magnitude of the restrictions contemplated by the model," he said.

Regulators and consumer advocates have complained in recent years about the use of industry data bases such as the Comprehensive Loss Underwriting Exchange and others that seem to arbitrarily deny coverage for some factors that would not seem relevant.

For example, the measure not only prohibits mere inquiries from negatively impacting an applicant's loss history but also any claim that does not result in a payment, at least in the first two instances.

"In fact, most evidence in the market suggests that one Closed Without Payment makes an insured more likely to have a future loss," Mr. Alldredge said.

But advocates of the measure claim a majority of the states are looking at the issue, and so therefore a model law would serve an important purpose.

Rhode Island State Sen. David Bates, R-Barrington, noted that a total of 32 states have either taken action with regard to loss history reports or are planning to next years.

"The companies have been complaining there has not been enough standardization of regulation, so why the heck wouldn't you want a model act?" he asked.

Mr. Bates gave no indication of what portions of the model would be taken out or what kind of proposal would be put before the lawmakers next March.