Credit Scoring, Med-Mal Insurance Dominate Busy Mont. Legislative Session

New Democratic control of the Montana executive and legislative branches proved challenging for insurers who faced uphill lobbying efforts on several fronts in 2005, according to the American Insurance Association (AIA).

AIA lobbied to defeat or amend bills to ban or regulate insurers’ use of credit information, and sought to defeat an overreaching measure to give the insurance commissioner broad authority to create a Joint Underwriting Authority (JUA) for medical malpractice insurance.

“Debate over insurers’ use of credit information dominated this year’s legislative session,” said Steve Suchil, AIA assistant vice president, western region. “Initially there were three measures on this issue. Insurers worked closely with legislators to craft a bill that balances the need for strong consumer protections with the need to preserve an important tool insurers use to predict risk and provide appropriate coverage to consumers.”

HB 41 and SB 354, which would have limited or banned insurer use of credit information, failed during the legislative process. SB 311, which implemented the National Conference of Insurance Legislators’ (NCOIL) model act on this issue, was approved by the legislature and signed by Gov. Brian Schweitzer (D) on April 21.

“AIA also lobbied very hard to develop acceptable amendments on a bill giving the insurance commissioner wide-ranging authority to create a JUA for medical malpractice insurance,” said Suchil. “Initially, HB 331 gave the commissioner broad authority to create a JUA randomly. AIA successfully worked with the doctors and the insurance commissioner to develop a process to follow before a JUA is established.”

Specifically, AIA’s amendments to SB 331 require the commissioner to conduct an investigatory process before a JUA is created. The process begins with a market review. If a lack of available coverage is found, the commissioner can establish a voluntary Market Assistance Program (MAP). If the MAP is unsuccessful, a JUA can then be established.

However, any JUA that is created must underwrite and rate policies using the same rules as other insurers operating in the state.

Finally, insurers can be assessed up to one percent of written premium in Montana to fund a JUA. SB 331 was approved by the legislature and Gov. Schweitzer has until April 29 to sign the bill into law.