I hadn’t heard much in the way of development in the fuss over the Florida OIR seeking to implement its new insurance credit scoring
regulation, but the Insurance Journal relayed
this salvo in the simmering battle:
The Florida Office of Insurance Regulation is making an end run around Florida law by seeking to implement a
credit-based insurance scoring rule that is currently being challenged in state court, according to the Property Casualty Insurers
Association of America.[...]In March 2005, PCI, and other insurance trade associations filed suit against the Department of Financial Services, Office of
Insurance Regulation and the Financial Services Commission. The petition challenged the specific provisions of the rule as contrary
to statute, and also addressed the fact that, following reorganization of the Department of Financial Services, the OIR relied on
statute for promulgating the rule that did not give the OIR the authority to do so.[...]Florida’s law is in the mainstream regarding how states regulate insurers’ use of credit information. But with the OIR
interpretation, Florida is in essence banning insurance scoring by making compliance extraordinarily difficult, if not impossible.
The rule would require insurers to demonstrate that the use of the credit-based information does not have a disproportionate affect
on “persons of any race, color, religion, marital status, age, gender, income, national origin, or place of
residence.”
The phrase “disproportionate” is (I assume, but I’m not a lawyer) very close to the anti-discrimination law term “disparate”. And I
can’t help but wonder how “disproportionate” or “disparate” will be defined as regards personal lines insurance rating…or what the
spillover effects might be for other rating/underwriting variables.