An underwriter evaluates an application for a standard life insurance policy submitted by a freelance architect. Due to a history of late payments found on a routine consumer credit report, the underwriter issues the policy with a substandard rating and a correspondingly higher premium. Under the Fair Credit Reporting Act (FCRA), what is the insurer's immediate statutory obligation to the applicant regarding this adverse action?
- Provide a notice of the adverse action that includes the name and contact information of the consumer reporting agency that supplied the reportAnswer
- BSupply the applicant with a physical or electronic copy of the exact credit report used to determine the substandard rating
- CDelay the issuance of the policy for a minimum of 30 days to allow the applicant an opportunity to dispute the credit findings
- DNotify the state Department of Insurance about the adverse action before formally offering the rated policy to the applicant
Answer
The insurer must provide a notice of the adverse action that includes the name and contact information of the consumer reporting agency that supplied the report.
Under the Fair Credit Reporting Act, if an insurer takes an adverse underwriting action (such as rejecting an application or charging a higher premium) based wholly or partly on a consumer credit report, the insurer must provide the applicant with a notice of the adverse action. This notice must include the name, address, and telephone number of the consumer reporting agency that furnished the report, informing the applicant of their right to obtain a free copy from that agency within 60 days.
Step-by-Step Solution
Key Concept
FCRA Adverse Action Notification Requirements