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NU Online News
Service, By Steve Tuckey, Nov. 22, 2004 -The National Conference of
Insurance Legislators has tabled voting on a model bill curbing use of
customers' claims history in personal lines property insurance
underwriting.
Members of the Property Casualty Committee of NCOIL will make major
revisions to the proposed model before putting it before the panel at
the group's next meeting in March.
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. |