NAIC Seeks Comment on Credit Scoring by Advisory Organizations by September 18
Sep 14, 2009
As part of the continued discussions regarding credit-based insurance scores, the National Association of Insurance Commissioners (“NAIC”) is seeking input regarding the concept of regulating entities that provide credit-based insurance scores as advisory organizations. According to the NAIC, the information provided by credit scoring vendors is used by insurers in pricing much like the data provided to them by advisory organizations.
NAIC Model 775: Property and Casualty Model Rating Law (File and Use Version) generally defines an “advisory organization” as any entity, including its affiliates or subsidiaries, which either has two or more member insurers or is controlled either directly or indirectly by two or more insurers, and which assists insurers in ratemaking related activities. In addition, the Model Law provides that no advisory organization or statistical agent shall provide any service relating to statistical collection or the rates of any insurance and no insurer shall utilize the services of such organization for such purposes unless the organization has obtained a license.
To help facilitate additional discussion of this concept at the NAIC Fall 2009 National Meeting, the NAIC requests that any written comments on this topic be provided in Word format and submitted electronically to PSimpson@naic.org by Friday, September 18.
Additional language regarding the licensing of advisory organizations from the NAIC Model, Illinois and Oklahoma statutes is attached.
Should you have any questions or comments, please contact Colodny Fass.
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