ACTION PAGE: Sample Letters to Insurer, to State Insurance Commissioner & to State Legislative Delegation

This is a three-pronged CALL TO ACTION for all victims of our economic crisis AND those of us who know anyone who lost employment or suffered a major reduction in their credit card limits. They can and SHOULD take action right now.

The same applies to anyone whose credit score has precipitously declined for reasons not related to poor handling of credit. Examples might be an accident or an injury, or family emergency, or medical expenses, or any other reason you fell behind in paying your bills that does not bear any relevance to your driving habits. You too ought to consider taking some action to fight any increase in your insurance premiums.

FIRST, do NOT wait for your rates to increase; be proactive. Write to your insurance company and demand some relief. Tell them that you have suffered economic consequences not of your making (unemployment, reduction in hours, significant reduction in credit card limits, or other reasons). Let them know that this is strictly not attributable to any fault of your own, and that the adverse credit score consequences in no way impact your good driving habits.

Then ask them to confirm to you in writing that they will:
(1)grant you an exception from using your credit score; or
(2)take this information into account when setting your rates, instead of relying solely upon the insurance score that will be generated for you; or, if they cannot agree to either of these, then
(3)they will grant you an arbitration forum in which to resolve this dispute.

SECOND, if your insurer fails to make a satisfactory response as requested, then send your correspondence to your state insurance commissioner. You should make a summary of your economic plight or other reason for the reduced credit score, discuss the letter to your insurer and its lack of satisfactory response, and make it a formal complaint and demand for action.

THIRD, since so many state insurance commissioners appear to be more oriented toward the insurance industry instead of the consumer, you might not get much positive action out of that office. In that case do not be at all shy about sending a letter to your state governor and your state legislative delegation. Insist that SOMEONE take some action to correct a manifest injustice that inures solely to the benefit of the insurance industry

OUTLINE OF TOPIC:

1. Reasons to Demand Exemption NOW, & Follow-up With Insurance Commissioner and State Legislative Delegation

2. Gathering Facts to Support Your Argument

3. Here is some framework upon which citizens could construct letters to their state officials

4. Three Sample Letters to Insurance Company and Insurance Commissioner

1. Reasons to Demand Exemption NOW, & Follow-up With Insurance Commissioner and State Legislative Delegation

Of course there is a natural temptation is just to wait and see whether or not the premium rate will increase—and most people are afraid of somehow upsetting their insurer. Put those worries aside and write the letter ASAP; do not wait until your rate has been increased. Get your letter to your own company of record NOW, so you have some basis for a complaint should your company decide to ignore your request. Below are three sample letters to one's insurance carrier and to the State Insurance Commissioner.

As we all know, the credit score is the major factor comprising a consumer's "insurance score", upon which the auto insurance premium is based. Most states do have rules or statutes that place restrictions on the use of credit scores. Since we at www.SettlementCentral.Com are primarily engaged in providing information to assist accident victims in making their own personal injury insurance claim settlement, we have not catalogued all of the various rules and notice restrictions of each state.

That is something any citizen can easily find out, however. Simply ask your State Insurance Commissioner. If she does not respond, write to your governor and state legislative delegation—all of them.

And, as we explained above, since our work is with accident victim insurance settlements, we have not provided any information on the various ways in which insurance scoring is used by the companies. We know of no resource for that information, in part because the ways in which the companies use credit scoring to make their decisions regarding availability and pricing of their insurance products is a trade secret. No insurance commissioner knows their algorithms either.

However, DO NOT let that stop you from getting involved in the fight to regulate insurance scoring in these crisis times. This is a worthy fight at this time, when millions of otherwise blameless consumers face adverse insurance rate hikes because of employment losses or a reduction of their credit card limits.

YES, it is true that most states DO have in place some kind of regulation regarding the uses of credit scoring. And we believe that a few states do not permit a lowered insurance score to result in an increased rate at renewal. But it appears that the remainder of the states have no protections against increasing rates of millions of otherwise blameless consumers who have suffered devastating economic losses through no fault of their own.

Hence, we do encourage consumers to write to BOTH their State Insurance Commissioner AND to their entire state legislative delegation. Make these politicians explain why THEY have not heretofore taken action to protect their constituents in light of the impacts of this crisis. They are supposed to be working for you, aren't they? Do something about it if you are upset.

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2. Gathering Facts to Support Your Argument

The best place to begin to become educated on the topic of insurance scoring is: Credit Scoring Auto Insurance Premiums & Helpful Resources

Go to CREDIT SCORING AUTO INSURANCE PREMIUMS--HISTORY & DETAILS

It is not necessary to read beyond the information on that page. You know the facts of your own circumstances, and no additional knowledge is needed to use our letter formats below. They are designed with the minimum of recitation of legal argument. But if you wish some additional information on credit scoring, here are two resources.

An EXCELLENT example of how insurance scoring works and the laws one progressive state has enacted is posted online by Washington's Mike Kreidler, one of the nation's leading state insurance commissioners:

Any consumer who is going to petition her state officials on the topic of prohibiting credit scoring in good economic times, should visit that site and become familiar with the arguments for and against credit scoring. For example, Commissioner Kreidler posted this summary of historical arguments plus comments on how the law works and implementation:

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3. Here is some framework upon which citizens could construct letters to their state officials

As we noted above, research and legal points are NOT necessary to use our letter formats below. Hence you may skip this if you wish. But for those who wish to go beyond our simple format in order to argue for changes from their state government, the following presents three additional arguments to consider.

Specific issues to discuss in the letter
There is an entire industry lined up on each side arguing the pros and cons of the use of credit scoring in insurance availability and pricing decisions, and we are not going to get into that dispute at this time. The only thing we will comment upon for now is that at present the credit scoring system is grossly in need of immediate remedial action in a THREE respects:

FIRST, the basic premise of credit scoring simply DOES NOT WORK in these times of crisis inasmuch as there is no logical connection between the loss of economic well-being and one's insurance risk as a driver. There is no way to have a fair use of credit scores if the insurance score is lowered through no fault of your own in this economic crisis.

SECOND, state regulators ought to ensure that there is in place some kind of arbitration forum to be hosted at the insurer's expense or other no-cost appeal mechanismfor consumers to utilize if they feel that their credit scores have no relevant bearing upon their risk for an insurance loss. If the state regulators are not able to find an immediate solution to the use of credit scoring, perhaps, in light of this economic crisis, they could at the minimum provide some means of contesting the use of the credit score in setting premiums—at NO COST to the consumer.

Hence, the consumer needs some ENFORCEABLE RIGHT to an appeal or an arbitration forum in which to resolve this dispute, to be hosted at my insurer's expense. Some states do provide consumers an opportunity to complain to their insurers and to show that they should have an exemption because of their particular life circumstances. We respectfully submit that this ought to be made into a consumer right, with enforcement provisions. That way, any aggrieved consumer can simply show that her decreased insurance score has no relevance to any evaluation of her driving risk.

With millions of our citizens having been adversely impacted by this crisis. Isn't something like this long overdue? www.SettlementCentral.Com has petitioned the National Association of Insurance Commissioners (NAIC) to ask their members to take some IMMEDIATE and EFFECTIVE action for relief of those who have suffered in this economic crisis. You can join in that effort by writing to your own commissioner AND to your state legislative delegation. See SettlementCentral.Com Letter to National Association of Insurance Commissioners re: Credit Scoring

Go to <B><I>SettlementCentral.Com</I></B> LETTER TO NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS RE: CREDIT SCORING

THIRD, too much of this process is secret, hence affording opportunity to skirt the rules already in place. Yes, it is true that companies are (within reason) entitled to make their own secret approaches to the availability and pricing of their insurance products. BUT, without disclosing the companies' formulae, we respectfully submit that the various state regulators should be able to know the types of information that go into their calculations AND EVERY TYPE OF DECISION made as a result of those insurance scores. Here is one example of why some sunshine here would be a good idea.

Even in the face of state prohibitions, it took a consumer group to uncover the fact that some companies apparently used education level and occupation as additional factors in setting policy cost. In effect, irrespective of any driving risk, a high-school educated supermarket clerk was paying more than a company executive with a degree. See the Consumer Federation of American complaint letter

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4. Three Sample Letters to Insurance Company and Insurance Commissioner

These letters are not locked-in-stone examples. One should read some of the www.SettlementCentral.Com pages linked herein dealing with this topic, and then tailor the letter to be used to the individual circumstances. Here are two pages that deal with the topic of credit scoring when a consumer has suffered economic problems not of her own making. Learn the difference between your credit score and your insurance score (the latter being the basis for deciding upon the availability and pricing of your auto insurance).

Credit Scoring Auto Insurance Premiums & Helpful Resources

Resources to Investigate & Correct Your Own Credit Scoring Files

Employment Losses & Credit Restrictions Cause Auto Insurance Rate Increases: What YOU Should do About It

); and
SettlementCentral.Com Letter to National Association of Insurance Commissioners re: Credit Scoring

You are perfectly welcome to send your letter using our format. But if you wish to make your letter fit your own circumstances, then by all means do so. Take whatever sentences you wish from the above-linked pages and from the examples below, and add in your own facts, any you will have a good letter tailored to your situation.

One of the key points you will want to make is that your insurance score is going to be reduced through no specific fault of your own. Hence, the justification for using credit scoring does not apply in your case since the lower credit score does NOT reflect any increased risk of auto insurance loss. It does not matter whether or not your case is one tied to the economic crisis or your own crisis, such as an accident or an injury, or family emergency, or medical expenses, or any other reason you fell behind in paying your bills that does not bear any relevance to your driving habits. Just insert that reason in the letter in place of what we have written.

We recommend sending the letter via Certified Mail. There is no need to send a copy to your state insurance commissioner until you decide to send her a copy as part of a complaint.

#1. Example for LOSS OF EMPLOYMENT OR REDUCTION IN HOURS WORKED; remember that this is ONLY an example: you should insert your own facts and thoughts.

Sent Via Certified Mail

Your name, address, and date

President, insurance company name (you do not need to know her name, just use the title)
Insurer's address

Demand for Exemption to the Use of Credit Score in my Insurance Score

Dear President,

I am writing to demand that you exempt my account from use of my credit score to influence my insurance score. I am a victim of our national economic crisis and my economic situation has deteriorated due to no fault of my own.

Specifically, (here you put in your facts: either you lost your job or your work hours were reduced) my work hours have been reduced twice in the last two years. I went from a full time employee forklift driver for Retail Heaven, Inc. to only twenty-five hours per week at present. Hence, by paycheck has likewise been reduced, and I have fallen behind on my bills.

Like everyone else, I used my credit card for consumer purchases, and when I had full employment my payment record was satisfactory. However, with decreased income, I fell behind on my payments last year, and now I am in serious delinquency on my debts.

Consequently, my credit score has suffered a drastic reduction. I am told that I will likely have lost over 150 points from the time when I had full employment.

All of this has occurred through no fault of my own. The use of credit scores in creating the insurance score is based upon the assumption sold by the insurance industry that those who cannot handle credit properly are more likely to subject their auto insurers to greater risk. Hence, they deserve to be charged higher rates.

But in my case, there is not any fault that can be attributed to my reduced credit score and thus it is NOT a reflection of higher risk of insurance loss. Hence, there is no basis whatsoever to use my reduced credit score as the foundation of my insurance score.

I would be pleased to provide whatever documentation you may require in support of my allegations herein.

Please confirm in writing that my company will not use my credit score in setting my premium rate for insurance. If you cannot agree, then I will settle for an arbitration forum in which to resolve this dispute, to be hosted at your expense. If I do not receive a satisfactory response from you within forty-five days of the date of this letter, I will file as complaint with my state insurance commissioner. I will also complain to my state legislative delegation and use this as an example of the need for emergency legislation to protect the consumers from unjustified higher insurance rates.

Very Truly Yours,

(insert your name)

#2. Example for REDUCED CREDIT LIMITS and/or CLOSED ACCOUNTS; remember that this is ONLY an example: you should insert your own facts and thoughts.

Sent Via Certified Mail

Your name, address, and date

President, insurance company name (you do not need to know her name, just use the title)
Insurer's address

Demand for Exemption to the Use of Credit Score in my Insurance Score

Dear President,

I am writing to demand that you exempt my account from use of my credit score to influence my insurance score. I am a victim of our national economic crisis and my economic situation has deteriorated due to no fault of my own.

Specifically, (here you put in your facts: either you lost your job or your work hours were reduced) my AbuseUBank credit card limit was reduced from $20,000 down to only $4,000.

I have been reasonably compliant with all agreements to pay my bills on time, and nothing in my payment history was cited as the reason for this reduction in my limits. It is my understanding that tens of millions of credit card owners have suffered reduced limits or termination of credit card right. In either case, one's credit utilization ratio will be greatly increased, and the credit score will automatically suffer.

There is firm evidence that the leading FICO credit scoring formula is very sensitive to how much of one's available credit is being used. Hence, when the credit card limits are lowered or an account is closed, any existing balances will significantly increase the important credit utilization ratio.

This ineluctably leads to a reduced credit score, which carries over to a reduced insurance score, which in turn means insureds will pay increased premiums. These are certainly unearned inasmuch as there is no commensurate increase in risk of an insurance payout.

All of this has occurred through no fault of my own. The use of credit scores in creating the insurance score is based upon the assumption sold by the insurance industry that those who cannot handle credit properly are more likely to subject their auto insurers to greater risk. Hence, they deserve to be charged higher rates.

But in my case, there is not any fault that can be attributed to my reduced credit score and thus it is NOT a reflection of higher risk of insurance loss. Hence, there is no basis whatsoever to use my reduced credit score as the foundation of my insurance score.

I would be pleased to provide whatever documentation you may require in support of my allegations herein.

Please confirm in writing that my company will not use my credit score in setting my premium rate for insurance. If you cannot agree, then I will settle for an arbitration forum in which to resolve this dispute, to be hosted at your expense. If I do not receive a satisfactory response from you within forty-five days of the date of this letter, I will file as complaint with my state insurance commissioner. I will also complain to my state legislative delegation and use this as an example of the need for emergency legislation to protect the consumers from unjustified higher insurance rates.

Very Truly Yours,

(insert your name)

#3. Example for complaint to your state insurance commissioner and/or your state legislative delegation; remember that this is ONLY an example: you should insert your own facts and thoughts. You can get the contact information for your state insurance commissioner here. Be alert to the actual title of the office, e.g. "commissioner", "director", "superintendent", etc.

Sent Via Certified Mail

Your name, address, and date

Insert name, Insurance Commissioner
Insurance commissioner's address

Notice of Complaint Against (insert name of your insurance company) Regarding my Demand for Exemption to the Use of Credit Score in my Insurance Score

Dear Commissioner (insert name)

I hereby file a formal complaint against my auto insurance company (insert name of your insurance company), for UNFAIR BUSINESS PRACTICE in continuing to use my credit score for setting my auto insurance premium, even though they know that the score was significantly lowered through no fault of my own.

The use of my credit score as the foundation of my insurance score is an unfair business practice inasmuch as the decline in my score cannot be attributed to any fault or failure on my part. Hence, that decline does NOT IN ANY WAY presage an increased auto insurance risk.

I am a victim of our national economic crisis and my economic situation has deteriorated due to the national crisis.

Specifically, (here you put in your facts: (1) either you lost your job or your work hours were reduced; or (2) either OR both your credit card limit(s) was reduced and/or a credit card was closed); or (3) some other reason—as set forth in examples above. Then follow-up with an explanation, such as (1) for work: my work hours have been reduced twice in the last two years. I went from a full time employee forklift driver for Retail Heaven, Inc. to only twenty-five hours per week at present. Hence, by paycheck has likewise been reduced, and I have fallen behind on my bills. How does the fact that my working hours were reduced (OR--my job was shipped overseas) tell the insurance company anything about the risk of my established driving habits?

OR, for decrease in credit limit: my AbuseUBank credit card limit was reduced from $20,000 down to only $4,000. Hence, my credit utilization ratio was greatly increased, and the credit score automatically suffered. How does the fact that my credit card limits were lowered have any bearing whatsoever upon my risk for auto insurance loss?

It is clear that in a case such as mine the basic premise of credit scoring cannot apply inasmuch as there is no logical connection between the loss of my economic well-being and my risk as a driver.

On (insert date) I sent a letter to the President of (insert name of your insurer) via certified mail. To date I have received no response (or to date the only response I have received is to the effect they will study my demand to discard the credit score in my case).

This business practice is an abuse to many others with like circumstances. Hence, it must be adjusted or terminated as soon as practicable. Each day you allow it to continue is another day one of our state's consumers will suffer this abuse.

I would like to see you require (insert name of your insurer) to cease using my credit score for pricing my policy premiums, and I respectfully suggest that you consider applying your ruling in general to the other insurers writing policies in our state.

I would be pleased to provide whatever documentation you may require in support of my allegations herein.

Please confirm in writing that my company will not use my credit score in setting my premium rate for insurance. If you cannot agree, then I will settle for an arbitration forum in which to resolve this dispute, to be hosted at my insurer's expense. If I do not receive a satisfactory response from you within forty-five days of the date of this letter, I will also complain to my state legislative delegation and use this as an example of the need for emergency legislation to protect the consumers from unjustified higher insurance rates.

Very Truly Yours,

(insert your name)

SITE NOTE:
The usual insurance claim business of www.SettlementCentral.Com is to provide information, guidance, forms, letter examples, and templates for accident personal injury victims to make their own personal injury insurance claim settlements.

Insurance Claim Help & Demand Letters for Auto Accident, Dog Bite, and Slip/Trip & Fall Accident Victims

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