South Carolina Director of Insurance Ernst Csiszar has issued a bulletin stipulating under which circumstances credit scoring may be used to underwrite and rate auto insurance policies.
Backed by the American Insurance Association (AIA), the bulletin does not allow a credit score to be the sole factor upon which the insurer makes a decision to insure or not. Also, insurers who use credit scores must file with the department the loss experience that justifies any credit or surcharge due to the consumer’s credit score. Furthermore, consumers must be told when they apply that their credit scores may be considered by the insurer.
“The South Carolina bulletin strikes an important balance in preserving insurers’ ability to consider credit while providing additional protections for consumers,” Raymond G. Farmer, AIA assistant vice president, southeast region, commented. “Most insurers writing personal auto policies in the state are using credit because it’s a proven tool for measuring risk and allows insurers to write more policies at better rates for consumers who are less likely to have a loss. The bulletin simply clarifies that under current law insurers can use credit, but there are certain requirements that insurers must meet in order to do so.”
The bulletin is effective Jan. 1, 2003. It can be found on the following Web link: South Carolina Insurance Department Bulletin 2002-04.
Topics Carriers Legislation
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