Mo. Gov. Signs Credit-Scoring Bill

Gov. Bob Holden late last week signed a bill regulating insurers’ use of credit- based insurance scores in auto and property insurance.

National Association of Independent Insurers (NAII) Counsel Ann Weber said representatives of insurance companies and agents worked extensively with legislators to draft language in House Substitute Bill 1502/1821 that is acceptable to all interests.

The legislation, which will go into effect July 1, 2003, provides that insurers cannot take adverse action against an applicant or policyholder under the following circumstances:

• Using credit information as the sole factor in underwriting.
• Basing decisions on credit information contained in a credit report that the insurer knows is in dispute.
• Using credit information in renewing a contract until at least three years after the policy was issued.

In addition, an insurer cannot use the number of insurance inquiries that an applicant makes as a negative factor in evaluating the application.

An insurer is required to inform an applicant that credit information will be used in underwriting and inform the applicant of his or her rights regarding that information. An applicant or policyholder that is adversely affected by the credit information must be notified of the specific reasons for that action and may request a re-evaluation after information in the credit report is corrected.