NCOIL Adopts Insurance Underwriting Transparency Model Act


For Immediate Release
March 29, 2023
Contact: Pat Gilbert
(732) 201-4133

Model Will Provide Consumers With Clear and Useful Information About Changes to Their Homeowners and Auto Insurance Policies

Belmar, NJ – At the 2023 National Council of Insurance Legislators (NCOIL) Spring National Meeting in San Diego, the organization adopted the NCOIL Insurance Underwriting Transparency Model Act sponsored by Indiana Representative Matt Lehman, NCOIL Immediate Past President. The Model was passed by both the NCOIL Property & Casualty Insurance Committee and the NCOIL Executive Committee.

The Model will give states a framework to provide personal auto and homeowners insurance consumers informative and valuable information explaining the basis for a “material change” made to their policies. A “material change” is defined as: a nonrenewal or cancellation; an increase of more than ten percent (10%) over the expiring premium; a reduction in coverage; or another adverse or unfavorable change in the terms of coverage of amount.

Insurers must provide a notice that either explains the principal factors for the material change or states that the insured has the right to request and obtain an explanation of the principal factors for the material change. The notice explaining the material change must: be sufficiently clear and use language specific to enable the insured to identify the basis for the insurer’s decision to make the material change; include a description of the principal factors most heavily weighed by an insurer in making a material change, listed in no particular order; and provide a point of contact through which the insured may discuss the reasons for the material change. The notice must also be sent to the insurance producer, if any, who represented the insured in obtaining coverage from the insurer, or who represented the insurer in regard to the providing of coverage to the insured.

The Model also suggests in Drafting Notes that States may wish to consider expanding the scope of the Model to make it applicable to declinations, and requiring a specific number of principal factors to be included in the notice provided to the insures (or applicant if a State has expanded the Model to include declinations).

“I am proud to sponsor this Model as it will allow consumers and agents to understand why certain changes are made to policies and enable them to make the better informed coverage related decisions,” said Rep. Lehman. “As a legislator and insurance agent, I know that having more transparency in this area is a necessity that is only becoming more important as companies continue to integrate more technology in their business models. When a consumer wants to know why their premium increased, the answer from the insurer or agent is too often “I don’t know.” This Model is an important development in helping consumers get better answers to that question.”

“I’m glad that Representative Lehman and NCOIL recognized the need for this type of Model legislation,” said Rep. Jordan. “This was a very deliberate and thoughtful process and while I would have liked to see the Model go a bit further in terms of explicitly applying to declinations and requiring the insurer to provide more information in the notice to the insured, the Model is a good starting point that States can use to develop their own transparency-focused laws.”

During the drafting and deliberation process, NCOIL legislators and staff heard from a wide array of interested parties including: the American Council of Life Insurers (ACLI); the American Property & Casualty Insurance Association (APCIA); the Consumer Federation of California (CFC); the Independent Insurance Agents & Brokers of America (IIABA); and the National Association of Mutual Insurance Companies (NAMIC).

NCOIL CEO Commissioner Tom Considine said, “Thank you to Rep. Lehman for taking the lead and sponsoring this Model as well as Chair Jordan and the Committee for the work they did to get this Model over the finish line. Ensuring more transparency for consumers is a top priority for insurance legislators across the country and this Model is a good first step in making that possible.”

A full copy of the Model appears here:


NCOIL is a national legislative organization with the nation’s 50 states as members, represented principally by legislators serving on their states’ insurance and financial institutions committees. NCOIL writes Model Laws in insurance and financial services, works to preserve the State jurisdiction over insurance as established by the McCarran-Ferguson Act over seventy years ago, and to serve as an educational forum for public policymakers and interested parties. Founded in 1969, NCOIL works to assert the prerogative of legislators in making State policy when it comes to insurance and educate State legislators on current and longstanding insurance issues.