The American Insurance Association (AIA) today expressed disappointment that the Michigan Court of Appeals overturned a lower court ruling that called the Office of Financial and Insurance Regulation (OFIR) 2005 ban on insurer use of credit information “illegal, invalid and unenforceable.”“The Court of Appeals decision is a relatively unprecedented, fragmented three-part opinion that represents serious divisions on the court. For that reason, and the harm consumers will suffer by not benefiting from a proven risk assessment tool, an appeal of the decision is warranted,” said David Snyder, AIA vice president and assistant general counsel. “The Circuit Court and one of the Court of Appeals judges reached the unambiguous conclusion that the commissioner’s rules to ban credit-based insurance scores were an attempt to rewrite the state’s Insurance Code, while one Court of Appeals judge did not address issue.” OFIR filed their rule (R 500.2151-2155) in March 2005 and insurers immediately filed a legal challenge in Barry County Circuit Court. The rule would have forced insurers to stop using credit-based insurance scores (which can only be used in Michigan to provide premium discounts) on policies after July 1, 2005 and mandated a base rate rollback. Insurers prevailed in April 2005 and OFIR appealed. Oral arguments were heard in October 2006 and the Court of Appeals issued their opinion late yesterday. “We have maintained that a ban is the wrong public policy answer to questions about insurer use of credit information, which benefits a majority of consumers. If policy makers are intent on taking ‘action,’ a more balanced approach would be to enact something similar to the NCOIL model that addresses the real concerns of consumers as well as protects insurers’ business needs to use an actuarially proven risk assessment variable,” Snyder stated. Currently, 26 states have adopted laws or regulations based on the National Conference of Insurance Legislators’ (NCOIL) Model Law on Credit, while only four states do not allow insurer use of credit in some manner, with one of those states only legislatively prohibiting it for one line of insurance. The case is Insurance Institute of Mich., et. al. v Commissioner of the Office of Financial and Insurance Services (2005) #262385. The three-part decision can be found at the following links: Judge White’s opinion: http://courtofappeals.mijud.net/documents/OPINIONS/FINAL/COA/20080821_C262385_52_262385.OPN.PDF Judge Zahara’s opinion: http://courtofappeals.mijud.net/documents/OPINIONS/FINAL/COA/20080821_C262385_53_262385P.OPN.PDF Judge Kelly’s opinion: http://courtofappeals.mijud.net/documents/OPINIONS/FINAL/COA/20080821_C262385_54_262385P2.OPN.PDF
.jpg)
No comments:
Post a Comment