Harleysville Fined For Bogus Letters
By E.E. Mazier
NU Online News Service, Aug. 13, 10:17 a.m. EST?A unit of the Harleysville Insurance Group has paid an $80,000 penalty for sending Minnesota policyholders allegedly deceptive credit authorization forms, Minnesota officials announced.
Minnesota Commerce Commissioner Jim Bernstein, the state's insurance regulator, said yesterday that the fine was imposed for a letter sent earlier this year by the Harleysville Lakestate Insurance Company, of Traverse City, Mich.
The letter stated that in order to apply its "good credit discount," upon renewal, Harleysville needed the policyholder's written permission to use the person's credit history.
The letter went on to state if the recipient was currently receiving the credit score discount, "Minnesota law mandates that we remove the discount if you do not respond to this request."
The Commerce Department stressed that, although the insurer could remove the "good credit discount" if a policyholder refused to authorize access to credit information, no Minnesota law requires such removal.
"The use of credit scoring by insurance companies to determine rates is bad enough," Mr. Bernstein stated. "Being deceptive about it makes it worse."
He added that "only a handful of Minnesota consumers with higher credit scores get better rates" and that many other consumers with lower scores pay higher premiums, "if they can get insurance at all."
The Commerce Department said Harleysville agreed to stop using the form and to credit any customer's policy with the difference in premium attributed to the loss of the discount. The insurer also agreed to issue letters of explanation to policyholders.
When contacted, Harleysville confirmed that it had paid the fine, but would not comment further.
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