TCAIS Urges Strong Consumer Safeguards on Use of Credit

    AUSTIN, Texas--Aug. 20, 2002--Members of the Texas Coalition for Affordable Insurance Solutions (TCAIS) are announcing their support of seven principles for the regulation of credit information used by insurance companies in Texas.
    Some Texas home and auto insurers use credit information to help them assess risk.
    "In order for insurance to work for most consumers, insurers in Texas must be able to assess the risk of potential and current policyholders as accurately as possible," said Beaman Floyd, director of TCAIS. "We want to protect many Texas policyholders from having to pay higher premiums because, without the use of credit information, they could wind up subsidizing other customers who pose a higher risk for insurance losses."
    TCAIS members support good public policy to strengthen consumer protections regarding the use of credit information by insurers. TCAIS endorses the following principles for regulation in Texas:

1.  Require insurers to notify consumers that credit information is
    used by the company to help assess risk.

2.  Require insurers to:

    --  provide applicants an explanation of why they were not offered
        coverage if due to credit; and

    --  provide existing customers a written statement of reason, upon
        request, explaining why they received a premium increase or
        cancellation notice if due to credit.

3.  Prohibit insurers from using credit information as the sole factor
    in denying, canceling or not renewing a home or auto insurance
    policy.

4.  Protect those who have little or no credit history by limiting how
    insurers use a lack of credit history as a determining factor in
    denying coverage.

5.  Prohibit insurers from using certain credit information -- such as
    medical collection information and disputed information under
    investigation by a credit bureau -- to help assess risk.

6.  Require insurers to reevaluate policyholders, at their request, if
    they discover errors on their credit report.

7.  Require insurers that use credit on renewal to reassess consumers'
    credit information periodically and, when necessary, adjust their
    premiums accordingly.

    TCAIS is a newly created proactive alliance of insurance providers and trade organizations committed to working with legislators, regulators, consumers and others to find public policy solutions that will improve insurance affordability and accessibility in Texas.

    Its founding members include:

--	Allstate Insurance Company (www.allstate.com)
--	American Insurance Association (www.aiadc.org)
--	Nationwide Insurance (www.nationwide.com)
--	State Farm Insurance Companies (www.statefarm.com)
--	USAA (www.usaa.com)

    Additional information on the use of credit information in the insurance underwriting and pricing process can be found on the TCAIS Web site at www.tcais.org.