20-2110

20-2110. Reasons for adverse underwriting decisions

A. In the event of an adverse underwriting decision the insurance
institution or insurance producer responsible for the decision shall either provide the
applicant, policyholder or individual proposed for coverage with the specific reason for
the adverse underwriting decision in writing or advise the person, in writing, that upon
written request the person may receive the specific reason in writing and provide the
applicant, policyholder or individual proposed for coverage with a summary of the rights
established under subsection B of this section and sections 20-2108 and 20-2109.

B. Upon receipt of a written request within ninety business days from the date of
the mailing of notice or other communication of an adverse underwriting decision to an
applicant, policyholder or individual proposed for coverage, the insurance institution or
insurance producer shall furnish to the person within twenty-one business days from the
date of receipt of the written request:

1. The specific reason for the adverse underwriting decision, in writing, if the
information was not initially furnished in writing pursuant to subsection A of this
section.

2. The specific items of personal and privileged information that support those
reasons except that:

(a) The insurance institution or insurance producer is not required to furnish
specific items of privileged information if it has a reasonable suspicion, based upon
specific information available for review by the director, that the applicant,
policyholder or individual proposed for coverage has engaged in criminal activity, fraud,
material misrepresentation or material nondisclosure.

(b) Specific items of medical record information supplied by a medical care
institution or medical professional shall be disclosed either directly to the individual
about whom the information relates or to a medical professional designated by the
individual and licensed to provide medical care with respect to the condition to which
the information relates, at the option of the insurance institution or insurance
producer.

3. The names and addresses of the institutional sources that supplied the specific
items of information pursuant to paragraph 2 of this subsection, except that the identity
of any medical professional or medical care institution shall be disclosed either
directly to the individual or to the designated medical professional, whichever the
insurance institution or insurance producer prefers.

C. The obligations imposed by this section upon an insurance institution or
insurance producer may be satisfied by another insurance institution or insurance
producer authorized to act on its behalf.

D. If an adverse underwriting decision results solely from an oral request or
inquiry, the explanation of the specific reasons and summary of rights required by
subsection A of this section may be given orally.

E. In providing the specific reason for an adverse underwriting decision based on
credit related information contained or not contained in an individual's consumer report,
the insurance institution or agent shall provide at least the following information:

1. That the decision was based in part on a consumer report or the absence of
credit history.

2. The source of the consumer report and how the individual may obtain a copy of
the consumer report.

3. A description of up to four factors that were the primary cause for the adverse
action that resulted from the insurance score.

F. An insurer shall not use the following types of credit history to calculate an
insurance score to determine property or casualty premiums for insurance transactions
that are subject to this article and shall not knowingly use an insurance score developed
by a third party if the score is calculated using any of the following types of credit
history:

1. The absence of credit history or the inability to determine the consumer's
credit history unless the insurer's action is actuarially justified or the insurer treats
the consumer as if the consumer had neutral credit information, as defined by the
insurer.

2. Credit history or an insurance score based on collection accounts identified
with a medical industry code.

3. A bankruptcy or a lien satisfaction that is more than seven years old.

4. The consumer's use of a particular type of credit card, charge card or debit
card unless actuarially justified.

5. The consumer's total available line of credit, except that an insurer may
consider the total amount of outstanding debt in relation to the total available line of
credit.

6. An insurance score that is calculated using the income, gender, address, zip
code, ethnic group, religion, marital status or nationality of the consumer as a factor.
This section does not prohibit an insurer from using zip code, address, gender and
marital status information for underwriting purposes.