Insurers may obtain consumer reports from consumer reporting agencies (CRAs) in order to underwrite insurance policies and screen applicants. Such reports may include information about an individual's credit history, medical condition, driving record, and criminal history. When an insurer obtains a consumer report from a CRA for the purpose of underwriting a policy or screening an applicant, the insurer must comply with the Fair Credit Reporting Act.

Adverse Action Notices

The Act requires an insurer to provide an individual with an oral or written "adverse action notice" when the insurer takes "adverse action" against the individual and the adverse action is based solely or partly on a consumer report. Adverse actions include the denial of an application for insurance, an increase in rates, or the termination of an insurance policy. The notice is required even if the information in the consumer report was not the main reason for the adverse action.

The adverse action notice must include:

(1) the name, address, and telephone number of the CRA that furnished the consumer report;

(2) a statement that the CRA did not make the decision to take the adverse action and cannot give specific reasons for it; and

(3) a notice of the individual's right to dispute the accuracy or completeness of any information in the consumer report and his right to obtain a free copy of the report from the CRA upon request within 60 days.

Medical Information

The Act requires an insurer to obtain an individual's oral, written, or electronic consent before obtaining medical information about the individual.

Violations of the Act

Individuals may sue insurers for violations of the Act. Such individuals may recover damages, court costs, and attorney fees. Punitive damages may be recovered for deliberate violations of the Act.

Copyright 2009 LexisNexis, a division of Reed Elsevier Inc.