GALLAGHER APPLAUDS NEW RULE TO PREVENT DISCRIMINATION
Tom Gallagher, Florida’s chief financial officer, applauded a new rule that will require insurance companies to demonstrate how they use credit scores when writing or pricing insurance coverage and that the practice is not unfairly discriminatory.
“There should be a zero tolerance policy for any information used by insurance companies that impacts your ability to obtain or maintain coverage based on your race, religion, income level, or other discriminatory factors,” Gallagher said.
Gallagher led the charge on this issue starting in 2001, when he appointed a task force to examine the insurance industry’s use of credit reports and credit scores when writing and pricing homeowners and auto insurance coverage. At that time, half of the top ten writers of homeowners insurance admitted to using credit information or credit scores, and nine of the top ten writers of auto insurance use one or both.
After several public hearings around the state, Gallagher’s task force made a series of recommendations, many of which were included in legislation passed by state lawmakers in 2003.
Gallagher, who serves on the Cabinet, said the rule approved today was long overdue because the 2003 legislation, Senate Bill 40-A, called for the Office of Insurance Regulation to develop rules to ensure that premiums charged based on credit reports or credit scores were not unfairly discriminatory.
The law, which went into effect on January 1, 2004, prohibits insurers from using a person’s credit history against them if they are dealing with unexpected medical bills or the death of a spouse. It also prohibits insurers from denying coverage or raising rates based solely on a credit report or score. Insurance companies are also prohibited from denying coverage or raising an insured’s rates based, in whole or in part, on any of the following factors: the absence of or insufficient credit history, past due medical bills, or place of residence.