CE- Claims Adjuster Academy

Rates

Investigative Consumer Report

The amount each consumer pays for his or her insurance policy is known as the insurance rate and competition among insurance companies to provide the lowest rates to consumer’s fuels the marketplace. The insurance department in the state governs

An investigative consumer report compiles more

information than a typical consumer report. Data were gathered from interviews with neighbors, friends, business associates, and so on. The report includes information on the consumer’s habits, general reputation, character, and lifestyle (Fair Credit Reporting Act, 1972, Sec. 1681a).

how the rates are determined and applied, and it further outlines that insurance companies must provide their rate structure to the insurance department for review and compliance with all state regulations (TDI, 2021g).

There are speci fi c areas where rates must be scrutinized. The state stipulates that rates must NOT be, as follows:

By law, the consumer must be informed within 3 days that a report has been requested. The consumer must also be noti fi ed that he or she has the right to request additional information. The person or entity requesting the report must provide a full and accurate disclosure to the consumer about the contents of the report within 5 days of receipt of the report, or when the report was fi rst requested, whichever is later.

Excessive : Rates may not be too high, and consumers may not be overcharged for insurance.

Inadequate : Although consumer concerns are considered, insurance companies must be able to charge a high enough rate to cover the insurance company’s losses and exposures. Discriminatory : The main issue of discrimination in insurance rates relates to the assumption of parties of risk. It does not mean that all consumers should pay the same amount for insurance. The very nature of the business indicates that certain factors, such as age, sex, and physical status, determine lower or higher rates. However, rates cannot discriminate in that certain members of one group cannot be charged a higher rate to subsidize lower rates for other members of the same group.

Prohibited Information

Not everything can be included in a consumer report. Most adverse information older than 7 years cannot be included (Fair Credit Reporting Act, 1972, Sec. 1681c), as well as these: • Bankruptcies over 14 years old • Suits and judgments over 7 years old • Paid tax liens over 7 years old • Accounts placed in collection or “charged off” over 7 years old • Arrests, indictments, or Conviction of Crime Reports

Standard Provisions in Contracts

Consumer Rights

To establish a small measure of uniformity, many states require standard provisions in contracts, or may have a standard policy format that is to be followed (TDI, 2021h). Terms that are used and de fi ned will be the same from provision to provision, to further ensure uniformity. Many states have “readability standards” that require that policies, provisions, and contracts be worded in the most simple, easy to understand terms.

If a consumer report contains information an individual believes is inaccurate, he or she has the right to request a reinvestigation to update the fi le (Consumer Financial Protection Bureau, 2015).

Individual Rights

Applicants have the right to know the kinds of information gathered, and to correct any inaccurate information. Applicants also have the right to be made aware of why they were turned down for insurance if that is the case (Ammerman, 2013).

Consumer Credit Report

A consumer report is issued solely to those who have a legitimate business need for information on an individual’s credit history, payment history on loans, and so forth (Investopedia, 2021). When an individual applies for a line of credit, or applies for an apartment, a consumer report will be requested by the creditor or the property owner. Some employers now request consumer reports as well. Though consumer reports are usually requested when one applies for a loan, they are not used for policy loans, which are the loans life insurance policy owners can take (Kagan, 2020d). This is because with a policy loan, the insurer is simply advancing money to the policyholder that will accumulate later on in the policy’s term.