A.M. Best

Maine Legislators Approve Credit-Based Scoring Bill, Reject Changes to Privacy Law

AUGUSTA, Maine 05/16/2003 (BestWire)-The Maine Legislature approved a bill favored by the insurance industry to regulate the use of credit information, and lawmakers rejected changes to the state's privacy law that would have put it out of step with federal legislation.

Maine is the first New England state to send legislation to the governor that follows the National Conference of Insurance Legislators' model on credit-based insurance scoring, according to the National Association of Independent Insurers.

It joins several states that have adopted the NCOIL model, or something close, this year, NAII spokesman Jeffrey Brewer said.

"There is some variation on the NCOIL model among the states that have passed it, but in large part the bills that were passed follow what the model intended to do regarding credit," Brewer said. Those states include North Dakota, which adopted the model as is, and Arkansas, Arizona, Georgia, Illinois, Indiana, Kansas, Nebraska, Maine, Oklahoma and Virginia.

Maine's legislation, H.B. 362, originally was very restrictive, containing provisions that insurers couldn't have complied with and that would have greatly diluted the effectiveness of using an insurance score, NAII counsel Ann Weber said in a statement. NAII opposed the bill in its original form.

The legislation sent to Gov. John Baldacci has since been changed to follow the NCOIL model regarding notice-of-adverse-action language, which requires an insurer include up to four factors that were the primary influences in an adverse action, and the measure specifically allows for standardized credit explanations provided by consumer-reporting agencies, Weber said.

On privacy, Maine's law mirrors the privacy requirements of the federal Gramm-Leach-Bliley Act, which provides consumers with a choice to opt out of the sharing of some information by financial-services institutions, according to the American Insurance Association.

Privacy provisions in that financial-services modernization act were crafted to maintain a balance between the privacy rights of consumers and the legitimate needs of financial-services companies to share information, Paul Moran, AIA's Northeast region vice president, said in a statement.

The rejected bill would have changed the opt-out requirement to an opt-in, if approved in a November referendum. An opt-in approach would have put Maine in a very small minority of states, increased costs to insurers and stifled innovation by companies, said Moran, adding that it also would require many more contacts by the company with customers.

(By Dennis Kelly, Washington bureau manager, BestWeek: Dennis.Kelly@ambest.com)