In its recent report, Improving U.S. Insurance Regulation, BPC makes several recommendations to improve outcomes on the purchase of insurance for consumers, including proposals on market conduct metrics, prohibiting the use of price optimization, and credit insurance. These recommendations are especially necessary today as the rise of “Big Data” and other innovations change what insurers know about consumers as well as how they interact with consumers.
BPC’s recommendations are aimed at improving policyholder outcomes. For example, consumer surveys and developing value metrics for insurance policies will allow consumers to better understand what they are buying, while improved state data collection on market outcomes will allow state regulators to proactively address any issues of concern, including where they may find markets for certain products that are not sufficiently competitive.
On credit insurance products, policymakers have already acted on a number of the recommendations. For one, a right to cancellation for credit insurance is already part of the NAIC’s Consumer Credit Insurance Model Act, which states:
“That within the first thirty (30) days after receiving the individual policy or group certificate, the debtor may cancel the coverage and have all premium paid by the debtor refunded or credited. Thereafter, the debtor may cancel the policy at any time during the term of the loan and receive a refund of any of the unearned premium.”
Of the 56 NAIC jurisdictions, 38 have adopted the model act language and another 14 have adopted similar versions for credit insurance. BPC’s recommendation is to create a minimum requirement for all such products in all jurisdictions and, because policies and innovations change markets over time, to address unforeseeable future scenarios as well.
The Truth in Lending Act, which was created to encourage the informed use of credit by consumers, also is designed to ensure that consumers have affirmatively elected to purchase such products, and prohibits practices like unfair bundling of these products with others.
BPC’s recommendations build on these actions to address remaining concerns in markets for credit insurance products.