20-2110. Reasons for adverse underwriting decisions

A. In the event of an adverse underwriting decision the insurance institution or insurance producer responsible for the decision shall either provide the applicant, policyholder or individual proposed for coverage with the specific reason for the adverse underwriting decision in writing or advise the person, in writing, that on written request the person may receive the specific reason in writing and provide the applicant, policyholder or individual proposed for coverage with a summary of the rights established under subsection B of this section and sections 20-2108 and 20-2109.

B. On receipt of a written request within ninety business days after the date the notice or other communication of an adverse underwriting decision is sent to an applicant, policyholder or individual proposed for coverage, the insurance institution or insurance producer shall send to the person within twenty-one business days after the date of receipt of the written request:

1. The specific reason for the adverse underwriting decision, in writing, if the information was not initially furnished in writing pursuant to subsection A of this section.

2. The specific items of personal and privileged information that support those reasons except that:

(a) The insurance institution or insurance producer is not required to furnish specific items of privileged information if it has a reasonable suspicion, based on specific information available for review by the director, that the applicant, policyholder or individual proposed for coverage has engaged in criminal activity, fraud, material misrepresentation or material nondisclosure.

(b) Specific items of medical record information supplied by a medical care institution or medical professional shall be disclosed either directly to the individual about whom the information relates or to a medical professional designated by the individual and licensed to provide medical care with respect to the condition to which the information relates, at the option of the insurance institution or insurance producer.

3. The names and addresses of the institutional sources that supplied the specific items of information pursuant to paragraph 2 of this subsection, except that the identity of any medical professional or medical care institution shall be disclosed either directly to the individual or to the designated medical professional, whichever the insurance institution or insurance producer prefers.

C. The obligations imposed by this section on an insurance institution or insurance producer may be satisfied by another insurance institution or insurance producer authorized to act on its behalf.

D. If an adverse underwriting decision results solely from an oral request or inquiry, the explanation of the specific reasons and summary of rights required by subsection A of this section may be given orally.

E. In providing the specific reason for an adverse underwriting decision based on credit related information contained or not contained in an individual's consumer report, the insurance institution or agent shall provide at least the following information:

1. That the decision was based in part on a consumer report or the absence of credit history.

2. The source of the consumer report and how the individual may obtain a copy of the consumer report.

3. A description of up to four factors that were the primary cause for the adverse action that resulted from the insurance score.

F. An insurer shall not use the following types of credit history to calculate an insurance score to determine property or casualty premiums for insurance transactions that are subject to this article and shall not knowingly use an insurance score developed by a third party if the score is calculated using any of the following types of credit history:

1. The absence of credit history or the inability to determine the consumer's credit history unless the insurer's action is actuarially justified or the insurer treats the consumer as if the consumer had neutral credit information, as defined by the insurer.

2. Credit history or an insurance score based on collection accounts identified with a medical industry code.

3. A bankruptcy or a lien satisfaction that is more than seven years old.

4. The consumer's use of a particular type of credit card, charge card or debit card unless actuarially justified.

5. The consumer's total available line of credit, except that an insurer may consider the total amount of outstanding debt in relation to the total available line of credit.

6. An insurance score that is calculated using the income, gender, address, zip code, ethnic group, religion, marital status or nationality of the consumer as a factor.  This paragraph does not prohibit an insurer from using zip code, address, gender and marital status information for underwriting purposes.