Don's Discussion

Are you a member with a question? Contact IA&B Legal & Corporate Affairs Director Don Bankus at 717-918-9204 or DonB@IABforME.com.

QUESTION:

What effect, if any, does placing a credit freeze have on insureds and prospective insureds if they’re shopping their policies?

ANSWER:

Over the past year, major data breaches again have thrust cybersecurity into the spotlight, as the personal and sensitive information of billions of people worldwide was compromised.

Notably, in November 2023, Infosys McCamish Systems, a provider of “platform-based insurance process management solutions and services” (per Infosys’ website) was hacked. The Infosys breach resulted in approximately 6 million consumers’ personal information having been compromised. Hackers gained access to email addresses, passwords, dates of birth, Social Security numbers, driver’s license numbers, state ID numbers, passport numbers, U.S. military ID numbers, financial account information, and payment card information.

In response, many consumers “froze” their credit to prevent identity theft. A credit freeze precludes lenders and credit card issuers from accessing individual credit reports via the credit reporting agencies (primarily Equifax, Experian, and Trans Union). That, in turn, prevents hackers from applying for and opening fraudulent credit accounts without an individual’s knowledge.

Producers and consumers alike have questioned what effect placement of a credit freeze has on the insurance industry, such as whether consumers are required to lift and then reinstate a credit freeze in order to purchase insurance.

The good news: credit freezes don’t shut out inquiries from insurers. Nearly all states (including Pennsylvania, Maryland, and Delaware) have enacted “credit freeze laws” that specifically permit insurers to access credit reports for purposes of setting or adjusting a rate, issuing or underwriting a policy, or adjusting a claim, all without requiring an individual to temporarily lift the freeze with the credit agency.

This means that neither the producer nor the insured needs to take any extra steps to allow a carrier to access credit information if an insured has a credit freeze in place, nor should initiating a credit freeze have any effect whatsoever on an insured’s premium.

Following are references to our respective states’ credit freeze provisions:

• Delaware: 6 Del.C. Section 2203(b)(12);

• Maryland: MD Code Annotated, Commercial Law Section 14-1212.1(b)(1)(x); and

• Pennsylvania: 73 P.S. Section 2503(e)(11).

This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice. Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Insurance Agents & Brokers nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/or any other government documents cited in this document.