Insurers who use credit scoring in underwriting and rate setting must take into consideration a recent security breach at the data collection company ChoicePoint Inc., according to a bulletin issued by the Texas Department of Insurance.
The Georgia company has recently acknowledged releasing the personal financial information of 144, 778 consumers, including more than 11,000 Texans, to fraudulent companies.
TDI’s Commissioner’s Bulletin directs the industry not to penalize consumers who may have been impacted by the leak of their personal information from ChoicePoint. Legislation passed in 2003 protects Texas consumers from inaccurate credit information being held against them by insurance companies that rely on credit scores to set rates or determine whether or not to accept a new customer.
The bulletin reiterates the law requiring insurers to afford this consumer protection, especially as it relates to the thousands of consumers potentially impacted by the release of information from ChoicePoint.
“Insurance companies need to closely follow the intent of the law and consumers need to know that they have rights,” said Texas Insurance Commissioner Jose Montemayor. “If people are victims of identity theft, the law protects them.”
The consumer protections regarding the use of credit scoring approved by the 78th Texas Legislature were widely recognized as among the strongest in the country. The protections provide consumers with an opportunity to fix incorrect information on their credit reports that might negatively affect their ability to secure insurance coverage or incorrectly raise the cost of such coverage. Insurers are also required to provide exceptions for any credit information that might have an adverse effect on consumers if it relates to any one of several life changing events including catastrophic illness or injury, the death of a close family member, the loss of a job, a divorce, or as in this case, identity theft.
According to the law, in order to protect their rights, consumers must make a written request for such an exception. But in the bulletin, TDI informed insurers to also accept verbal requests for credit exceptions related to the ChoicePoint incident and to be proactive in making contact with ChoicePoint on behalf of their customers or applicants for coverage.
TDI is also available as a resource to any consumer who is concerned that their personal financial information may have been part of the data stolen from ChoicePoint. Consumers with questions about the incident or their rights regarding insurance should call TDI’s toll free consumer line at: (800) 252-3439.
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