R590. Insurance, Administration.R590-219. Credit Scoring.
R590-219-1. Authority.
This rule is promulgated by the commissioner pursuant to Sections 31A-2-201 and 31A-22-320.
R590-219-2. Purpose and Scope.
(1) The purpose of this rule is to set forth minimum standards for a property and casualty insurer doing private passenger automobile business.
(2) This rule applies to a property and casualty insurer that uses credit history or an insurance score as part of its underwriting criteria or rating plans.
R590-219-3. Definitions.
Terms used in this rule are defined in Sections 31A-1-301 and 31A-2-320. Additional terms are defined as follows:
(1) "Adverse action" is defined in the Fair Credit Reporting Act, 15 U.S.C. Sec 1681 et seq.
(a) "Adverse action" includes:
(i) cancellation, denial, or non-renewal of insurance coverage; and
(ii) charging a higher premium than would have been offered if the credit history or credit score had been more favorable, whether the charge is by:
(A) application of a rating rule;
(B) assignment to a rating category within a single insurer, into which insureds with substantially like risk or exposure factors and expense elements are placed for purposes of determining rate or premium, that does not have the lowest available rates;
(C) placement with an affiliate insurer that does not offer the lowest rates available to the consumer within the affiliate group of insurers; or
(D) a reduction or an adverse or unfavorable change in the terms of coverage or amount of insurance owing to a consumer's credit history or insurance score.
(b) A reduction or an adverse or unfavorable change in the terms of coverage occurs when:
(i) coverage provided to the consumer is not as broad in scope as coverage requested by the consumer but available to other insureds of the insurer or any affiliate; or
(ii) the consumer is not eligible for a benefit, such as a dividend, that is available through an affiliate insurer.
(2)(a) "Initial underwriting" includes:
(i) the decision whether to issue a policy to the consumer;
(ii) the amount and terms of the coverage;
(iii) the duration of the policy;
(iv) the rates or fees charged; and
(v) the additional drivers related to the named insured or spouse by blood, marriage, adoption, or guardianship who were emancipated before becoming an additional driver in the named insured's household.
(b) "Initial underwriting" does not include an additional vehicle or driver added to the household of a current auto insurance policyholder of the insurer, provided:
(i) the additional vehicle is owned by the named insured, spouse, or a person related to the named insured by blood, marriage, adoption, or guardianship that is a resident of the named insured's household;
(ii) the additional driver is related to the named insured or spouse by blood, marriage, adoption, or guardianship and is a resident of the named insured's household, including a person who usually makes their home in the same household but temporarily lives elsewhere; or
(iii) the additional driver is a divorced spouse or child for whom an insurer has a record of the driving history from an existing policy.
R590-219-4. Insurer's Obligation If Credit Information Is Used.
(1) An insurer shall comply with the federal Fair Credit Reporting Act, 15 U.S.C. 1681 et seq.
(2) If an adverse action is taken, an insurer shall provide to the applicant or insured:
(a) the identity, telephone number, and address of any consumer-reporting agency from which a credit report was obtained;
(b) notification of the applicant's or insured's right to receive a free copy of their credit report from the consumer-reporting agency for 60 days from the date of application; and
(c) notification of the applicant's or insured's right to file a dispute with the consumer-reporting agency and have erroneous information corrected in accordance with the Fair Credit Reporting Act.
(3)(a) After an adverse action is taken, if it is later determined that the initial information in the credit report was incorrect, the insurance company, at the request of the applicant or insured, shall underwrite or rate the policy again using the correct information.
(b) If the insurer determines that the insured has overpaid premium, the insurer shall refund to the insured the amount of overpayment calculated back to the shorter of either the last 12 months of coverage or the actual policy period.
