Oregon Clarifies Credit Scoring Re-Rating Rules

September 13, 2010

The Oregon Insurance Division has issued a bulletin to clarify the use of consumer credit information for personal insurance policies.

According to the Department of Consumer and Business Services, Senate Bill 377 passed in the 2009 Legislative session, expanding the rights of a consumer to request re-rating a personal insurance policy and providing additional consumer protections, such as the results of a re-rating could only be used by an insurer to reduce a consumer’s insurance premiums

Since the law went into effect, DCBS said questions have been raised regarding the interpretation of certain provisions. For instance, the law does not allow a consumer to request a re-rating when the consumer’s credit information was never used at any time in rating the policy.

For instance, if Joe is a policyholder with ABC insurer and has had an auto policy with the company for 15 years, but ABC started using a credit rating plan just 10 years ago, the insurer does not have to re-rate Joe’s policy if Joe requests a re-rate because Joe’s policy was never rated using credit information, DCBS said. On the other hand, if Joe purchased a policy from ABC in 2006, then ABC would have to re-rate Joe’s policy upon Joe’s request. And even if ABC moved Joe’s policy to a renewal rating plan that did not use credit information in 2009, ABC would still have to re-rate Joe’s policy upon his request.

“If an insurer uses the consumer’s credit insurance score at any time in the rating of a personal insurance policy, the consumer may request, no more than once per insurer per policy line annually, that the insurer re-rate the consumer according to the standards that the insurer would apply if the consumer were initially applying for the same insurance policy,” the law states.

DCBS also wanted to clarify that if an insurer re-rates a policy at a consumer’s request that results in reduce premiums, “affiliates” of that insurer do not need to re-rate other personal insurance policies in the related policy line issued by the affiliate to the consumer. The law defines “insurer” as “every person engaged in the business of entering into policies of insurance,” which means an individual or business entity. Each insurer is a separate business entity, the Insurance Division said.

For more clarifications to the credit scoring rules, visit http://www.insurance.oregon.gov/bulletins/bulletin2010-04.html.

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