A Florida administrative law judge has declared that the Florida Office of Insurance Regulation's rule regarding the use of credit information by insurers is invalid.
According to the OIR, the rule requires all insurers to provide proof that the use of credit information in underwriting does not have a disproportionate effect on any protected class of people.
OIR spokesman Bob Lotane said the department is currently reviewing the 96-page opinion and would in the next couple of days spell out its plan to implement it.
“We found much in the ruling that was positive,” he said.
The property-casualty industry expressed satisfaction with the same decision, handed down by Judge Lawrence Stevenson.
“OIR's rule would have required insurers to meet an unprecedented 'disproportionate effect' standard that is contrary to state law,” said Guy Marvin, president of the Florida Insurance Council.
Because insurers do not collect the data necessary to prove there is no “disproportionate effect,” the rule would have effectively eliminated the use of credit information, he asserted.
The OIR filed its rule in March 2005 to implement the credit law passed by the Florida Legislature in 2003. That law, based on the National Conference of Insurance Legislators' Model Law on Credit, authorized insurers' use of credit information and credit scores in underwriting and rating.
Insurance trade groups contended OIR's rule went far beyond the language of the statute, and immediately filed the legal challenge that is the subject of the ruling issued last week.
Mr. Marvin said currently 26 states have adopted laws or regulations based on the NCOIL model, while only four states do not allow insurers to use credit information in some manner. One of those states prohibits credit scoring only for one line of insurance, he said.
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