Delaware Code Title 18 Sec. 8308 – Adverse action
If an insurer takes an adverse action based upon credit information, the insurer must meet all of the following notice requirements:
(1) Provide notification to the consumer that an adverse action has been taken, in accordance with the requirements of the federal Fair Credit Reporting Act, 15 U.S.C. § 1681m(a).
(2) Provide notification to the consumer explaining the reason for the adverse action. The reasons must be provided in sufficiently clear and specific language so that a person can identify the basis for the insurer’s decision to take an adverse action. Such notification shall include a description of up to 4 factors that were the primary influences of the adverse action. The use of generalized terms such as “poor credit history,” “poor credit rating,” or “poor insurance score” does not meet the explanation requirements of this paragraph. Standardized credit explanations provided by consumer reporting agencies or other third-party vendors are deemed to comply with this section.
(3) If the adverse action is a denial of personal insurance, provide notification that the applicant may inquire further about the credit information on which the denial is based and obtain a free copy of the credit report, the applicant may do so by mailing a written request to the insurer, or other such party as the insurer may identify in the notice, no more than 30 days after the date the notice of refusal was mailed to the applicant.
(4) Provide a statement that the consumer reporting agency that provided the credit information upon which the denial was based did not make the denial decision and is unable to provide the applicant the specific reasons for the denial.
(5) If the adverse action is a denial of personal insurance, the notice of denial shall be retained by the insurer and a record of the insurance score, related notice and correspondence with the applicant shall be maintained by the insurer or their vendor for a minimum of 3 years from the date of the denial notification to the applicant.
Terms Used In Delaware Code Title 18 Sec. 8308
- Adverse action: means a denial or cancellation of, an increase in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount of, any insurance, existing or applied for, in connection with the underwriting of personal insurance. See Delaware Code Title 18 Sec. 8303
- Applicant: means an individual who has applied to be covered by a personal insurance policy with an insurer. See Delaware Code Title 18 Sec. 8303
- Consumer: means an insured whose credit information is used or whose insurance score is calculated in the underwriting or rating of a personal insurance policy or an applicant for such a policy. See Delaware Code Title 18 Sec. 8303
- Consumer reporting agency: means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties. See Delaware Code Title 18 Sec. 8303
- Credit information: means any credit-related information derived from a credit report, found on a credit report itself, or provided on an application for personal insurance. See Delaware Code Title 18 Sec. 8303
- Fair Credit Reporting Act: A federal law, established in 1971 and revised in 1997, that gives consumers the right to see their credit records and correct any mistakes. Source: OCC
- Insurance score: means a number or rating that is derived from an algorithm, computer application, model, or other process that is based in whole or in part on credit information for the purposes of predicting the future insurance loss exposure of an individual applicant or insured. See Delaware Code Title 18 Sec. 8303