Regulators, Allstate clash over underwriting of credit. (use of credit history in choosing personal lines insurance applicants)

National Underwriter Property & Casualty-Risk & Benefits Management, November, 1994 by Otis, L.H.

WASHINGTON - Allstate officials clashed with state regulators during a public hearing on urban coverage over the appropriateness of their practice of using credit history as an underwriting criteria for personal lines insurance applicants. The practice has come under increasing criticism from consumer representatives and regulators as an underwriting guideline which does not directly relate to the associated risk but instead measures a subjective "moral hazard" and has the effect of unfairly discriminating against low-income applicants.

"We have data that shows a high correlation between [policyholder] financial stability and losses," said Michael P. Duncan, vice president and assistant general counsel of Northbrook, Ill.-based Allstate, in justifying the...

Read the rest of this article with a Free Trial at HighBeam Research.

Premium Content Partnership | HighBeam Research provides an in-depth online archive library of reference works.