Property-casualty industry trade groups are assailing the Florida Office of Insurance Regulation's plans for a new rule restricting carriers' use of credit records to rate customers.
Florida Insurance Commissioner Kevin McCarty said yesterday that the OIR will implement a new credit scoring rule requiring all insurers to make filings providing proof that use of credit scores does not have a disparate impact on a group of people defined by race, color, religion, gender or age.
"The filings must also include a complete description of the methodology utilized when using credit information and what impact having little or no credit history would have on policyholders," Mr. McCarty wrote.
The Property Casualty Insurers Association of America noted that it filed suit in March of last year against provisions of a 2003 statute, which the OIR rule would implement. A PCI spokesman said that case is still pending in the court system.
The OIR first proposed the rule in 2004 to implement credit scoring legislation passed the previous year based on the industry-supported National Conference of Insurance Legislators model.
"This is an illegal act that is unenforceable," said William Stander, assistant vice president and regional manager for PCI. "It is a sad day when the state's regulatory body flaunts the authority of the legal system and runs roughshod over due process rights. We will do everything possible to prevent them from enforcing this illegal rule."
Florida's law is in the mainstream regarding how states regulate insurers' use of credit information. "But with the OIR interpretation, Florida is in essence banning insurance scoring by making compliance extraordinarily difficult, if not impossible," Mr. Stander said.
He said that proving the negative is nearly impossible, and other studies have shown that insurance scores are objective when taken into account with other factors such as driving record and type of vehicle.
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