Client Education Needed as Credit Freeze Law Begins in NY
(November 2, 2006) — As we reported in the June 21 issue of IIABNY Insider, New York’s new credit freeze law took effect Nov. 1. Under this law, consumers may ask credit reporting agencies to freeze access to their credit reports. This will prevent most non-governmental entities, including insurance companies, from accessing the reports. A consumer who has initiated a freeze can request that it be lifted for specific parties or periods of time. Making this change will be free for victims of identity theft; others will have to pay a nominal charge.
Because New York law permits insurers to charge higher premiums for new customers based on credit score, it is important for agents and brokers to discuss with new clients the impact a credit freeze can have. Even clients who have been with the same insurer for years may be affected, as the law allows insurers to reduce premiums for existing customers based on credit score. If the insurer can’t access the credit score, the insured might not get a deserved price break.
IIABNY encourages all members to work with their personal lines clients to reduce the chances that this new tool they have at their disposal won’t hurt them.
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