Beyond the legislative battles and the various enticements utilized by carriers to build marketshare in a competitive market, by far and away the most significant regulatory issue arises at that point where the formula for calculating rates intersects the needs of carriers and what the Office of Insurance Regulation deems reasonable. Nowhere is that more apparent in the three-year battle between carriers and regulators over the use of credit reports and credit scores when setting consumers' premiums for homeowners and automobile policies. Now, after a series of rule hearings and other legal maneuvering, the issue is finally at a crossroads after the Financial Services Commission recently approved part of a proposed rule that calls for carriers that utilize credit reports to show the resulting rates don't negatively affect individuals on the basis of such factors as sex, race, and age.

Lead by Tom Gallagher, head of the Department of Financial Services, the commission approved two provisions of a proposed rule governing the use of credit reports (Rule 690-125.005). The language specifically states that as of Sept. 1, 2006, all insurers seeking a rate change must demonstrate that the use of credit scores does not disproportionately impact persons on the basis set out in the law. Further, by Dec. 1, 2006, all carriers that use credit scores must likewise prove the methodology behind the use of the reports doesn't result in the discrimination of any individual.

"Florida's cultural and ethnic diversity is unparalleled, but unfortunately this is also an environment where credit scoring often victimizes innocent consumers," said Insurance Commissioner Kevin McCarty. "Many religious and ethnic minorities often have limited or no credit history by choice or because they are beginning to climb the economic ladder. This should bear no relationship to what they pay for insurance or to what coverage is available to them."