The American Insurance Association, based in Washington, said it is "gratified" Minnesota lawmakers have realized that a complete ban on the use of credit information "would be anti-competitive and anti-consumer."

The AIA said the compromise measure was the culmination of months of discussions between lawmakers, regulators, insurance agents and the state's property-casualty insurance industry.

The original version of the bill would have banned completely the use of credit information by insurers, the AIA said.

"When this process began several months ago, there seemed to be some support for throwing the baby out with the bath water in an effort to correct perceived abuses of this tool," noted Paul C. Blume, Jr., AIA vice-president, Midwest region.

The approved measure states, in part, that:

? Consumers must be told up front that credit information will be used in the underwriting process.

? Carriers must exclude credit history as a factor in canceling, non-renewing or rejecting coverage in "no-hit" situations where a consumer is not found in data banks.

? Carriers must provide "reasonable" underwriting exceptions when an insured or applicant requests such exceptions in the event of a defined extraordinary life event.

? Carriers must file credit methodologies and support data with the Minnesota Department of Commerce, which has jurisdiction over insurance matters.

"While AIA remains concerned with some vague language in the bill, overall we are pleased that Minnesota lawmakers have decided to allow their constituents to continue enjoying the benefits of insurance scoring," Mr. Blume said.

Meanwhile, insurers and their trade groups are engaged in another credit-scoring battle in Rhode Island.

While a Rhode Island House measure, H 8027, would ban the use of credit-based insurance scores by insurers, AIA and the other trades are pushing for Senate bill S 2348 as amended, the AIA said.

According to James T. Harrington, AIA vice president, northeast region, "the House bill would do great damage to the insurance market by prohibiting insurers from using a tool that is an accurate and efficient predictor of risk."

In the view of the AIA and the other trade groups, the use of insurance scores allows more insurance companies to write more policies, which in turn will create more choice for consumers.

The AIA said that it worked closely with Sen. David Bates, R- East Providence, the sponsor of S. 2348 as amended, to improve his bill.

Among the items in the Senate bill that the AIA said it had negotiated:

? Limiting the measure's reach to homeowners and private passenger auto policies --not commercial policies.

? Allowing the use of insurance scores as the sole basis for underwriting or rating if a policyholder's score worsens because of a bankruptcy, tax lien, garnishment, foreclosure or judgment, or if a second insurance score taken six months later confirms the worsening score.