Maryland Insurance Administration Proposes to Revise Regulation Governing Disclosures of Credit Scoring Use in Private Passenger Automobile Insurance Rating
The Maryland Insurance Administration (MIA) recently proposed to revise a regulation regarding the use and disclosure of credit history in underwriting and rate making for personal automobile policies.[1] Specifically, the proposed regulation would revise Code of Maryland Regulations (COMAR) Section 31.15.11.06(A),[2] which describes the credit history use disclosure that insurers are required to provide to an applicant if the insurer uses credit history to rate new personal automobile policies. The proposed regulation would revise that subsection as shown directly below.[3]
.06 Private Passenger Motor Vehicle Insurance Credit History Use Disclosure Premium Quotation.
- A. [Contents of] Required Disclosure.
- (1) An insurer that rates a new policy of private passenger motor vehicle insurance based wholly or partly on the credit history of an applicant shall, at the time of application, advise the applicant [in writing on the application form] that:
- (2) The disclosure shall:
- (a) Be printed in a prominent location on an electronic or paper application that is completed by the applicant; or
- (b) Be verbally relayed to the applicant by the representative of the insurer who completes the application on behalf of the applicant.
- (3) If the disclosure is verbally relayed to the applicant by the representative of the insurer who completes the application on behalf of the applicant, the representative shall document the date, time, and manner that the disclosure was provided in the application file.
- B. Premium Quotation. On request of an applicant, an insurer shall provide to the applicant in writing a premium quotation that separately identifies the portion of the premium attributable to the applicant’s credit history.
The addition of subsections (2) and (3) would require the written disclosure of use of credit history to be prominently displayed, and, more importantly for agents and brokers completing applications on behalf of applicants, require the disclosure to be verbally expressed to the applicant (with documentation of the date, time, and manner of the disclosure). The regulation would maintain the language requiring that an insurer provide a premium quote that separately identifies the portion attributable to credit history; though, it does not appear that the verbal communication requirement for agents and brokers would extend to that requirement.
It is important to note that these proposed changes relate to the provisions triggered if an insurer merely “rates a new policy of private passenger motor vehicle insurance based wholly or partly on the credit history of an applicant,” and that separate and additional notice requirements apply in the case of an adverse action where “an insurer does not give an applicant the best available rate or discount due wholly or partly to information from the credit report of the applicant,” with those notice requirements paralleling the requirements set forth in the Fair Credit Reporting Act (FCRA).[4] The proposed revisions to COMAR 31.15.11.06(A) seem to target what the MIA may see as shortcomings in the adverse action notice process or content, and/or to allow applicants to understand, and potentially compare, the rating methodologies of various insurers earlier in the comparison and quoting process.
COMAR 31.15.11.06(A) is based on the language of Maryland Insurance Article Section 27-501(e-2)(4), which states as shown directly below (emphasis added). In the proposed regulation, the MIA cites Section 27-501 as its authority for the proposed revisions.
- (4) With respect to private passenger motor vehicle insurance, an insurer that rates a new policy based, in whole or in part, on the credit history of the applicant:
- (i) may not use a factor on the credit history of the applicant that occurred more than 5 years prior to the issuance of the new policy;
- (ii)
- 1. shall advise an applicant at the time of application that credit history is used; and
- 2. shall, on request of the applicant, provide a premium quotation that separately identifies the portion of the premium attributable to the applicant’s credit history;
The comment period for the proposed regulation closed on July 26, 2025; however, we were unable to locate any publicly-available comments on the proposed regulation as of the date of this Article. We recommend agents and brokers licensed in Maryland track the progress of this proposed regulation to ensure they comply with any finalized changes.
[1] See MIA’s Regulatory Activity Webpage, available at https://insurance.maryland.gov/Pages/newscenter/RegulatoryActivity.aspx (Draft Proposed Regulations; First Entry as of the date of this Article).
[2] See MIA’s proposed changes to COMAR 31.15.11.06.A, available at https://insurance.maryland.gov/Documents/newscenter/legislativeinformation/31.15.11.06-Draft-6262025.pdf
[3] This view was generated by comparing the current version of COMAR 31.15.11.06.A with the proposed version posted by MIA in the above-cited link.
[4] Notices of adverse actions are governed by COMAR 31.15.11.09.E, stating as follows: “E. Notice of Adverse Action. If an insurer does not give an applicant the best available rate or discount due wholly or partly to information from the credit report of the applicant, the insurer shall: (1) Provide to the applicant orally, in writing, or electronically: (a) The name, address, and telephone number of the consumer reporting agency that furnished the credit report to the insurer; (b) If the consumer reporting agency compiles and maintains files on consumers on a nationwide basis, a toll-free telephone number established by the consumer reporting agency; and (c) A statement that the consumer reporting agency did not make the decision to take the adverse action and is unable to provide the applicant the specific reasons why the adverse action was taken; and (2) Provide to the applicant an oral, written, or electronic notice of the applicant’s right: (a) To obtain, under §1681j of the federal Fair Credit Reporting Act, a free copy of a credit report on the applicant from the consumer reporting agency within 60 days after receipt of the notice; and (b) To dispute, under §1681i of the federal Fair Credit Reporting Act, with a consumer reporting agency the accuracy or completeness of any information in a credit report furnished by the agency.”
