The introduction of insurance scoring is yet another step in
providing consumers with choices in companies, products
and price. Consumer safeguards crafted by DOBI are de-
signed to protect the interest of New Jersey auto insur-
ance policyholders, and encourage competition.
Auto insurance companies that use insurance scoring must
notify policyholders of the practice, the factors that affect
the scoring, and whether an “adverse event” is being con-
sidered.
Other protections prevent auto insurance companies
from using insurance scoring as the only factor in de-
termining rates. DOBI also requires auto insurance com-
panies to submit their scoring model to the Department
and to fully disclose the factors used in establishing the
model as well as its statistical justification. New Jersey
auto insurance scoring models cannot consider race,
ethnicity, sex, age, religion, income, address, unpaid medi-
cal bills, and the number of inquiries made within 30 days
for home and auto loans.
DOBI protections also: 1) prohibit auto insurance compa-
nies from using insurance scoring for consumers covered
by the Dollar-a-Day or Basic Policy programs; 2) prevent
auto insurance companies from putting a consumer with-
out a credit history in a below-standard tier without actu-
arial justification; and 3) requires auto insurance
companies to protect policyholders who have been with
the company for seven years and had no claims or viola-
tions.
DOBI’s guidelines also require auto insurance companies
to provide exceptions for consumers whose credit infor-
mation has been directly influenced by extraordinary life
events, such as catastrophic illness or injury; death of a
spouse, child or parent; temporary loss of employment;
divorce; or identity theft. In such cases, auto insurance com-
panies may consider only credit information that is not af-
fected by the event or shall assign a neutral insurance
score.
How Does DOBI Protect the Consumer?
DOBI guidelines require auto
insurance companies to provide
exceptions for consumers
whose credit information
has been directly influenced
by extraordinary life events,
such as:
Death of a spouse,
child or parent
Catastrophic illness or injury
Identity theft
Divorce
Temporary loss
of employment