N.D. Insurers Must Provide Notice on Credit Scores

October 27, 2005

North Dakota Insurance Commissioner Jim Poolman has issued a memorandum to property/casualty insurers writing business in the state stating companies using credit-based insurance scores in the underwriting and rating of business are “expected” to provide “adverse action” notification.

In accordance with the 9th Circuit Federal Court decision in Reynolds v. Hartford Financial Services, et al., the Fair Credit Reporting Act (FCRA) requires provision of adverse action notification anytime a higher rate is charged based on credit, regardless of whether it is an initial quote or a renewal rate. The three-judge panel opinion also states that failure to make such disclosures is a “willful” violation of law, which would allow consumers to sue for damages if they can prove they were not provided notice.

The National Association of Mutual Insurance Companies (NAMIC) and other interested parties have filed briefs calling for the full 9th Circuit (en banc) to hear the case.

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