May 14, 2003

Office of Financial and Insurance Services (OFIS) Commissioner Linda A. Watters today issued Bulletin 2003-02-INS to revise a previous Bulletin that was designed to conform insurance credit scoring practices to Insurance Code requirements.

“This revision empowers Michigan consumers and allows them to determine when, and if, credit re-scoring will impact their premium,” said Watters. “Now, with this new Bulletin, re-scoring is required only at the request of the policyholder if they have a reason to believe they will see a discount, if they are currently not receiving one, or a higher discount.”

Originally, Bulletin 2003-01-INS mandated that insurance companies using insurance credit scoring recalculate a policyholder’s insurance credit score annually subjecting policyholders to the potential loss of discounts each year.

The new Bulletin also emphasizes that companies using insurance credit scoring must disclose to their policyholders annually what their insurance credit score is and in what tier the policyholder is rated. The Bulletin reminds the companies that under federal laws they must disclose to policyholders when the insurer has taken an adverse action based on an insurance credit score.

“I encourage companies to disclose to policyholders specific reasons why they have a low insurance credit score,” added Watters. “In the long run, consumers will also be able to achieve lower premiums by improving their credit management practices – benefiting companies as well as policyholders, for lower premiums promote policyholder retention.”

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The Michigan Office of Financial and Insurance Services (OFIS) is responsible for the regulation of Blue Cross Blue Shield, 31 HMOs, 143 banks, 275 credit unions, almost 1,500 insurance companies, 1,583 investment advisers, 2,164 securities broker-dealers, 6,000 consumer finance lenders, 105,000 insurance agents, and 120,715 securities agents. OFIS is part of the Department of Consumer and Industry Services and is primarily fee-funded, requiring minimal public tax dollars for its regulatory and consumer assistance activities.

OFIS has insurance, financial institutions and securities information available online at the OFIS web site, www.michigan.gov/ofis, or at the Michigan government home page, www.michigan.gov. All information is also available through the OFIS toll free number, 877-999-6442. If you would like to receive OFIS press releases electronically, please email ppdavis@michigan.gov.