Revised:
09/22/2006
February 5,
2003
The Oregon Insurance Division has adopted regulations
governing insurance companies' use of credit-based
insurance scores in writing personal automobile and
homeowners policies. The regulations take effect June 1.
"We are pleased that the division took action to avert
potential inconsistencies," said Sam Sorich, vice
president and western regional manager of the National
Association of Independent Insurers (NAII). "The
restrictions contains a number of disclosure and
underwriting provisions. Overall, the new rules
establish fair requirements relating to insurers' use of
credit information for underwriting and rating."
The Oregon Insurance Division accepted NAII's suggested
wording of the definition of an "adverse action,"
creating a less unwieldy and more abbreviated
definition.
"By incorporating the definition of 'adverse action' in
the U.S. Fair Credit Reporting Act, rather than
attempting to define the term using other language, the
division will be able to eliminate some confusion for
both policyholders and insurance companies," Sorich
said. "Over the course of working on the regulations
with NAII and others, the division became more
prescriptive in what insurers need to address in their
statements of credit use. The timing and scope of the
initial notice to the consumer and of the insurer's use
of credit histories are better clarified."
Some of the most significant requirements in the
regulations are:
· An insurer must notify a consumer who has requested
insurance coverage that the insurer will check the
consumer's credit history.
· During the application process, the insurer must
notify the consumer that the consumer may request a
written statement that describes the insurer's use of
credit information.
· An insurer that uses a consumer's credit history in
connection with the renewal of the consumer's policy
must notify the consumer of the use when the insurer
makes a renewal offer. The insurer must also inform the
consumer that the consumer has a right annually to
request that the insurer use current credit information
in the renewal process.
· When an insurer takes an adverse action based on
credit information—such as a non-renewal or rate
adjustment—the insurer must provide the consumer with a
notice that summarizes the most significant reasons for
the adverse action.
· An insurer may not cancel or refuse to renew a policy
on the basis of credit history or an insurance score,
however, certain exceptions are provided.
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