The Ohio Department of Insurance will conduct a review of Ohio insurance companies to inquire about the industry’s current use of credit scoring and how companies are moving toward complying with a new regulation that went into effect June 12, 2003.
The Joint Committee on Agency Rule Review (JCARR) approved the new regulation in May. The rule prohibits insurance companies from using a consumer’s credit score as the sole criterion for rating or underwriting personal auto and homeowners insurance policies. The new rule will also require that certain disclosures be made to consumers by insurers, including an explanation of credit report findings that can contribute to a higher rate or rejection of coverage.
Companies must be in full compliance by Sept. 12. The review will begin in August and consist of a sample of randomly selected companies licensed to conduct business in Ohio.
The department will analyze companies’ policies and procedures in relation to the use of credit scores in the underwriting and ratemaking process and how insurers are preparing to comply with the new regulation. If necessary, the department may further review insurance companies’ credit scoring practices.
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