Okla. Legislature Approves Scoring Bill

The Oklahoma House approved a bill earlier this week regarding insurance scoring that is based on model legislation developed by the National Conference of Insurance Legislators (NCOIL), the American Insurance Association (AIA) reported.

“While SB 539 does limit the use of insurance scores by insurers, it also provides important consumer protections and affirms the right of insurers to use this accurate and cost-effective underwriting tool,” said John Marlow, AIA assistant vice president, southwest region. “The use of insurance scores, along with other more traditional underwriting data, greatly improves insurers’ ability to predict future claims. This allows insurers to price their products more efficiently, accurately and consistently.”

SB 539 is based on the NCOIL model legislation, a consensus approach to addressing insurers’ use of insurance scores that was approved by that body last November. AIA was successful in defeating attempts to unreasonably impair and/or restrict the ability of insurers to use this important underwriting and rating tool. Major provisions of the bill include the following:

• Prohibits an insurer from denying, canceling, nonrenewing or basing renewal rates solely on the basis of credit information, without consideration of any other applicable underwriting factor;
• Requires an insurer to disclose to an applicant for insurance that credit information will be used in underwriting and rating;
• Requires an insurer to notify a consumer in the event of an adverse action based on credit information, including up to four factors that were the primary reasons for the adverse action;
• Prohibits insurers from using certain information in scoring models, including income, gender, address, zip code, ethnic group, religion, marital status, or nationality of the consumer as a factor; and
• Limits the manner in which an insurer may handle a consumer who lacks credit information or for whom no score can be generated.

SB 539, sponsored by Sen. Glenn Coffee (R), was passed unanimously by both houses of the legislature – 100-0 in the House of Representatives and 44-0 in the Senate. The bill was sent to Gov. Brad Henry (D) for his signature on April 16, and he has until April 23 to sign it.