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Insurers make case for credit scoring

The National Association of Insurance Commissioners (NAIC) continued to debate the pros and cons of using consumer credit scores to determine premiums for coverage yesterday, at a committee hearing before the body's market regulation and consumer affairs committee.

Consumer groups have said the use of credit scores to determine the cost of auto insurance and other insurance premiums discriminates against low income and minority consumers. Insurers argue that use of credit scores are good underwriting practice and a good predictor of risk.

The National Conference of Insurance Legislators (NCOIL) - an organization of state legislators advocating for state-level regulation - sent a letter to the regulatory group stating its support for its own model for use of credit scores.

NCOIL said its model seeks a "balanced public policy that safeguards our constituents from possible abuse" and protection for consumers during the current economic recession.

Robert P. Hartwig, president of the Insurance Information Institute, said in prepared testimony that it is a misconception that during hard times consumer credit scores fall. Hartwig defended insurance industry scoring practices as fair and accurate. The current economic crisis should lead to more manageable levels of consumer debt, Hartwig said, according to a report from National Underwriter.

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