Ark. Joins Court Filing on Credit Scoring

Arkansas Insurance Commissioner Julie Benafield Bowman announced the Arkansas Insurance Department has joined with twelve other states filing a brief supporting a case brought by consumers against the insurance industry’s use of credit scoring in determining auto rates.

The amicus curiae or friend of the court brief was filed with the U.S. Supreme Court in the cases of Safeco Insurance Co. of America v. Charles Burr and GEICO General Insurance Company v. Ajene Edo.

The plaintiffs contend both insurance companies violated the federal Fair Credit Reporting Act (FCRA) by not sending out adverse action notices when a consumer’s credit information resulted in the consumer receiving a higher rate. Many insurance companies currently use credit scoring in determining rates for auto and homeowners insurance.

The brief asks the court to uphold the decisions of the 9th U.S. Circuit Court of Appeals in the Safeco and GEICO cases. That court found the companies willfully disregarded the FCRA by not sending adverse action notices to some consumers.

The thirteen insurance commissioners, including Bowman, told the court they were filing their brief to “further their collective mission of protecting consumers by supporting interpretations of the FCRA that (a) put valuable information in the hands of consumers, (b) provide appropriate incentives for insurance companies that use consumer credit information to adopt procedures that assure compliance with the law, and (c) hold insurance companies accountable when they adopt policies that recklessly disregard consumer rights in contravention of the FCRA.”

Commissioner Bowman said she felt it was important to join in the filing of the brief as all consumers deserve to know if something in their credit score has resulted in higher rates for their auto insurance.

Other states joining in the filing were Delaware, California, Georgia, Iowa, Kansas, Michigan, Montana, New Mexico, North Dakota, Oklahoma, Utah and Washington. Oral arguments are scheduled for Jan. 16, 2007.

Source: Arkansas Insurance Department