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NAIC Delays Study of Disparate Impact of Insurance Based Credit Scoring

Bowing to intense pressure from the insurance industry, the NAIC has delayed a proposed study of the possible disparate impact of insurance based credit scoring....
September 23, 2003

Bowing to intense pressure from the insurance industry, the NAIC has delayed a proposed study of the possible disparate impact of insurance based credit scoring. Washington State Insurance Commissioner Mike Kreidler, an advocate of such a study and co-chair of the NAIC's working group on insurance scoring, said states could study the matter on their own but he also indicated the issue is not dead. The industry vigorously opposed such a study being conducted by the NAIC, calling it flawed, irrelevant and even racist. At issue is whether insurance scoring negatively impacts racial of ethnic minorities.

Insurance scoring is counter-intuitive, according to Kreidler. "Hundreds, if not thousands of consumers call up and say, 'What does this have to do with the way I drive my car?'" he said. Meanwhile former Illinois Department of Insurance Director Nat Shapo said even if insurance scoring did have such an impact, that's not the legal standard for discrimination. Shapo said a disparate impact study could "undermine the foundations of the insurance risk classification system."