AGO 2004-08.

• Case Date: February 09, 2005
• Court: Indiana

Indiana Attorney General Opinions 2005. AGO 2004-08. February 9, 2005Originally issued May 18, 2004 OFFICIAL OPINION 2004-8Representative Michael Ripley Indiana House of Representatives 2990 S. 650 E Monroe, Indiana 46772 Re: Department of Insurance Bulletin 123Dear Representative Ripley: This letter is in response to your correspondence of December 19, 2003. You raised a concern about how the Commissioner of the Department of Insurance ("Commissioner") interprets Indiana Code section 27-2-21-16. The statute provides in pertinent part that an insurer shall not "[d]eny, cancel, or decline to renew a personal insurance policy solely on the basis of credit information" or "[b]ase an inswed's renewal rate for a personal insurance policy solely on credit information." Ind. Code § 27-2-21-16(2) & (3) (2003) (emphasis added). The Commissioner reads this language to mean that "an insurer may not deny, cancel, decline to renew or increase a renewal rate due to a credit score unless at least one other rating factor has changed to indicate a denial, cancellation, declination to renew or increase in the premium rate." Ind. Dept of Ins., Use of Credit Information by Insurance Companies, Bull. 123 (Dec. 5, 2003) (emphasis added) (hereinafter Bulletin 123).(fn1) You contend that Bulletin 123 places restrictions on insurers that were not intended by the General Assembly when it adopted Public Law Number 201-2003 (Ind. Code § ch. 27-2-21). Although the Commissioner's interpretation of Public Law Number 201-2003 is entitled to great deference, Bulletin 123 does place constraints on insurers that were not imposed by the Legislature. BACKGROUND In recent years insurers have used a customer's credit information to derive credit scores. They then use the credit scores to assist them in calculating premiums and making underwriting decisions for personal insurance. Insurers maintain that credit scores are an accurate predictor of loss frequency and severity.(fn2) But, "[q]uestions have been raised not only about the validity of credit history as a predictor of risk, but also its fundamental faimess, and the impact of credit scoring on minority and low income groups."(fn3) Numerous state legislatures have recently considered the use of credit scores. Last year several states, including Indiana, adopted legislation based on the National...