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The Federal Trade Commission today provided Congress with an update on the progress of its study on the use of credit-based insurance scores in homeowners insurance.

Insurance companies have increasingly used information about credit history in the form of credit-based insurance scores to decide whether to offer consumers insurance, and if so, at what price. Credit-based insurance scores are numerical summaries of one’s credit history. They typically are calculated using a variety of information, including past delinquencies and information on the public record, such as bankruptcy, how close a consumer is to his or her credit limits, evidence of seeking new credit, the length and age of the credit history, and the use of certain types of credit.

Pursuant to Section 215 of the Fair and Accurate Transactions Act (FACTA), the Commission is directed to study and report on the impact of credit-based insurance scores on consumers of homeowners insurance, among other things. In the FTC’s testimony, Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection, told the U.S. House Financial Services Committee’s Subcommittee on Oversight and Investigations that the FTC has authorized the use in its homeowners insurance study of compulsory process under Section 6(b) of the FTC Act and Section 215 of FACTA. The testimony also stated that the Commission intends to use this authority to issue orders to the nine largest homeowners insurance companies to obtain data for its study.

The testimony explained that, prior to issuing these orders, the FTC is seeking input from all interested parties on the information that a draft model order would require homeowners insurance companies to produce. The Commission has placed on its Web site a draft model order setting forth in detail the information it intends to obtain from homeowners insurance companies pursuant to compulsory process. The FTC will be accepting public comment on the draft model order for 30 days.

In addition to providing an update about the agency’s homeowners insurance study, the testimony conveyed views on proposed legislation that would prohibit the use of credit-based insurance scores to discriminate on the basis of race or ethnicity.

The Commission vote authorizing the presentation of the testimony and its inclusion in the formal record was 4-0. A copy of the testimony can be found on the FTC’s Web site and as a link to this press release.

Copies of the testimony are available from the FTC’s Web site at and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.

(Credit-Based Insurance Scores Testimony)
(FTC File No. P064814)

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