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Gallagher Alerts Consumers to Insurers’ Use of Credit Reports


TALLAHASSEE – Florida Treasurer and Insurance Commissioner Tom Gallagher today alerted consumers that an increasing number of insurers are using credit information when deciding whether to offer automobile and homeowners' insurance coverage, and how much consumers should pay for that coverage.

Of the top ten writers of homeowners' insurance, half of the insurers consider credit information in underwriting. Nine of the top ten writers of automobile insurance also use it in underwriting.

"Consumers should know that their credit history plays a role in their ability to obtain and maintain insurance coverage," Gallagher said.

His words of caution follow on the heels of recent recommendations from a task force he appointed to examine insurance companies' use of credit reports in underwriting and rating automobile and homeowners' insurance policies.

The task force, established in September, held four public hearings around the state over the last four months. Task force members made a series of recommendations, some of which can be adopted by department rule, others requiring an act of the Legislature. A key recommendation of the task force was that credit information should not be the sole factor in determining coverage and rates.

Gallagher said he recognized that insurers use credit information as an underwriting tool, but believes it should not be used to the exclusion of other relevant factors, such as driving records or claims histories.

"Credit history, and credit and insurance scores, may be one way to analyze a particular policyholder," Gallagher said. "But we need to make sure it is applied in a fair, non-discriminatory way."

Under the federal Fair Credit Reporting Act, credit reports can be used for insurance underwriting. If credit history played a role in an insurance company's decision to deny coverage, the act requires the insurer to inform the consumer and supply the name of the credit bureau that provided the information.

Although Florida law does not specifically address insurers' use of credit reports, a department rule is currently in place that requires insurers to notify consumers when their credit report is used and to advise the consumer if an adverse decision is made based on the report.

"Task force members did an excellent job of looking at this important consumer issue, and their recommendations warrant further consideration," Gallagher said.

Meanwhile, the Department of Insurance will conduct a public education campaign to alert consumers to the importance of credit information.

Consumers who suspect that their credit history played a role in denied coverage or higher premiums should take the following steps:

Ask the insurance company if it uses credit reports as a determining factor.

Obtain a copy of your credit report. Credit reporting agencies include: Experian (800/682-7654), Equifax Credit Information Services (800/685-1111), and Trans Union Corporation (800/916-8800).

When your report arrives, make sure it's accurate. If you find a mistake, ask for a correction from the credit bureau. By law, the credit bureau must respond to your request within 30 days.

If you've been denied insurance, appeal. Ask the insurance company to put the reason in writing.

The full report of the task force is available online at under "Credit Report Task Force."