During the underwriting of an individual disability income policy, an insurer requests a standard consumer report on the prospective insured. The credit reporting agency returns a file showing multiple recent defaults and a high debt-to-income ratio. Consequently, the underwriter decides to approve the coverage but imposes a significant premium surcharge and limits the monthly benefit. Under the Fair Credit Reporting Act (FCRA), what is the insurer legally required to do in response to this underwriting decision?
- Issue an adverse action notification to the applicant that includes the identifying details of the agency that generated the report.Cevap
- BForward a complete physical or electronic copy of the consumer report directly to the applicant for verification.
- CDirect the applicant to submit a formal dispute regarding the credit history directly to the insurer's underwriting department.
- DObtain additional written authorization from the applicant before legally applying a premium surcharge based on the credit findings.
Cevap
The insurer must issue an adverse action notification to the applicant that includes the identifying details of the agency that generated the report.
When an insurer makes an adverse underwriting decision—such as denying coverage, increasing premiums, or reducing benefits—based on a consumer report, the Fair Credit Reporting Act (FCRA) requires the insurer to provide an adverse action notice. This notice must inform the applicant that the decision was based on the report and must include the name, address, and phone number of the consumer reporting agency so the applicant can obtain a copy and dispute any inaccuracies.
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Fair Credit Reporting Act (FCRA) Adverse Action Requirements