Insurer Use of Credit Scoring Rule Still Pending; DOAH Order Issued

In February 2005, the Florida Office of Insurance Regulation (“OIR”) proposed a Rule, 69O-125.005 Use of Credit Reports and Credit Scores by Insurers to prevent discrimination in the use of credit scores by insurers.

This Rule would have imposed an affirmative burden on insurers to establish with OIR that any credit scoring methodology utilized did not “disproportionately affect” consumers based on race, color, religion, marital status, age, gender, income, national origin or place of residence. 

Some insurance industry trade associations challenged the proposed Rule in an administrative proceeding, arguing it would effectively ban the use of credit scores in the underwriting of insurance policies. 

In December 2006, an administrative law judge ruled in favor of the industry associations and determined the Rule’s definition of “unfairly discriminatory” was impermissibly vague and that the Rule could not be enforced by OIR. 

In July 2007, the OIR initiated new rulemaking on credit scoring, which also was challenged by some industry trade associations.  The proposed Rules in question were:

69O-125.005: Use of Credit Reports and Credit Scores by Insurers, and
69O-125.006: Unfair Discrimination in Use of Credit Reports or Credit Scores by Insurers

The Rule challenge has been pending at The Florida Division of Administrative Hearings (“DOAH”) since August 2007. 

On July 25, 2008, DOAH issued an Order Continuing Case In Abeyance (“Order”) regarding this challenge of the Florida Office of Insurance Regulation (“OIR”)’s latest version of the credit scoring Rule.  The Order establishes the following:

1. The case will remain in abeyance for another 30 days,
2. The parties are required to file a status report on or before August 25, 2008,
3. The Respondent’s Motion to Strike Immaterial Documentation is denied, and
4. The Respondent’s Motion to Dismiss for Lack of Subject Matter Jurisdiction is held under advisement.  

The Administrative Law Judge provided in the Order that this matter has been pending for an extended period of time and that it will either have to be moved toward a hearing or “go away.”

This Order, which may be viewed by clicking here, is the latest development on this Rule challenge. 

 

Should you have any questions or comments, please do not hesitate to contact Colodny Fass.  

 

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