Iowa Conducts Hearings, Study on Ethics, Fairness of Credit-Based Scoring

Iowa regulators are holding the last in a series of public hearings on the use of credit-based insurance scoring in underwriting, specifically the ethics and fairness of the practice.

Insurance Consumer Advocate Angel Robinson had led the hearings -? the last of which is scheduled for Sept. 16 -- as part of a comprehensive review that includes a new university study. Robinson took charge of a new consumer unit within the Division of Insurance last year with a mandate to "assure that the protection of consumers will remain our primary focus," Commissioner Susan Voss said in a statement announcing Robinson's hire (BestWire, Oct. 24, 2008).

Robinson will include testimony from the hearings in a review and report that will supplement an academic study being conducted for insurance regulators by St. Ambrose University in Davenport, Iowa, the Division of Insurance said. Another component will be an Iowa-specific consumer survey.

"As this is an issue that directly affects consumers, it's key to actually hear from consumers to find their opinions on the matter," Robinson said in a statement.

Regulators expect to complete their work by the end of the year.

Wisconsin officials recently held a legislative hearing on credit-based insurance scoring chaired by state Insurance Commissioner Sean Dilweg (BestWire, Sept. 15, 2009).

Concerns about the impact of job and home losses caused or exacerbated by the recession prompted the National Conference of Insurance Legislators to approve an amendment to its model law on credit-based insurance scoring that would require insurers using the practice to allow leeway for customers' "extraordinary life circumstances." Property/casualty insurers supported the amendment as a fair compromise between insurer and consumer interests (BestWire, July 12, 2009).

The NAIC, at its meeting in Minneapolis in June, did not reach an agenda item on the use of credit-based insurance scoring after additional testimony was heard (BestWire, June 16, 2009).

The top five writers of homeowners multiperil insurance in Iowa in 2008, according to A.M. Best state/line data, were: State Farm Group, with a 25.8% market share; Nationwide Group, 17.3%; American Family Insurance Group, 8.3%; Farm Bureau Mutual Group, 7.0%; and Auto-Owners Insurance Group, 3.7%.

The top five writers of private passenger auto insurance in Iowa in 2008, according to A.M. Best Co. state/line product information, were: State Farm Group, with a 20.8% market share; Nationwide Group, 12.7%; Progressive Insurance Group, 12.3%; American Family Insurance Group, 7.7%; and Farm Bureau Mutual Group, 7.3%.