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Carriers Express Concern About FCRA Amendment

Insurers are expressing concern about an amendment tacked on last week to legislation reauthorizing the Fair Credit Reporting Act (FCRA). On July 16, the House...
July 23, 2003

Insurers are expressing concern about an amendment tacked on last week to legislation reauthorizing the Fair Credit Reporting Act (FCRA). On July 16, the House Financial Services Subcommittee on Financial Institutions unanimously passed H.R. 2622, a bill intended to amend FCRA to protect against identity theft, improve dispute resolution, improve the accuracy of consumer records and make other changes to FCRA as part of the renewal. Also included is an amendment by Rep. Luis Gutierrez (D-Illinois) to commission a study by the Federal Trade Commission (FTC) in consultation with the Department of Housing and Urban Development (HUD), on the effects of credit scoring and insurance scoring on the availability of credit. The purpose of the study would be to check for "disparate impact" -- whether races, ethnic groups, classes and genders are hurt more than others by insurers' use of credit information. Results of the study would be reported to Congress 18 months after enactment of the bill.

Carrier groups have expressed concern about the study. They want a relatively "clean" FCRA reauthorization bill, confined to making permanent key expiring preemption provisions of the FCRA that maintain uniform national standards on credit reporting, plus identity theft protections. On June 21, four carrier organizations - the Alliance of American Insurers (Alliance), the American Insurance Association (AIA), the National Association of Independent Insurers (NAII) and the National Association of Mutual Insurance Companies (NAMIC) - released an independent national study they jointly funded that asserted there is a strong correlation between credit based insurance scores and insurance risk. Carriers point to this study as a reason the federal government does not need to do another one.

H.R. 2622 is expected to go before the full House Financial Services Committee this week.

What It Means to Agents: PIA supports reauthorization of the Fair Credit Reporting Act (FCRA) and is working with other associations and key Members of Congress on reauthorization of the expiring FCRA provisions, and how a credit scoring report will be handled.

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