Underwriter pull MVR for someone not on quote

[MattinPA]

Hi,
Just had an interaction with an personal lines underwriter pulling an MVR on a driver that was possibly related to the household. That struck me as odd that they could pull an MVR for a non household family member not listed on the quote, without that persons permission. Any thoughts on this?

 

[InsCommentary]

Furnishing MVRs...Legal But Not Permitted
Author: Mike Edwards

When a commercial lines client requests an agency to run an MVR on a new employee in conjunction with adding him/her as a driver to the BAP, the agency may be able to do so without the written permission of the employee. That is, under the FCRA, Section 604, it's legal if necessary to "the underwriting of insurance." However, that doesn't mean you can do it....


Commercial insureds in the process of hiring employees who will be driving company vehicles routinely contact their insurance agent to have the drivers added to the Business Auto Policy.

Typically, the commercial insured will provide the agency with the new employee's driver's license number, so that the agency can run an MVR. Some agencies have the practice of faxing the employer a copy of the MVR, especially in situations where the employee's driving record does not meet the underwriting guidelines of the Business Auto Policy. In other instances, the agency might call the employer to discuss problems with the MVR.

It's legal. The federal Fair Credit Reporting Act (FCRA), which applies to all "consumer reports," including MVRs, CLUE reports, credit scores, and many other types of information on individuals, has very strict guidelines on what is "legal" regarding the use of such reports.

Under the FCRA, an employer is well within their rights to require that a current or prospective employee provide or make available a wide variety of personal information such as an MVR, credit report, criminal background report, etc. At the same time, the employee is granted significant safeguards regarding the access and use of such information for employment.

When any consumer report will be used for employment, the employee or prospective employee must first give written permission for such information to be obtained by the employer. When the employer requests this information from a "consumer reporting agency" (CRA) such as Equifax, Experian, TransUnion, ChoicePoint, etc., there are certain federally-mandated documents and procedures which must accompany the transaction between the CRA and the employer. For a detailed report on this, see the Federal Trade Commission (FTC) report, "Using Consumer Reports: What Employers Need To Know," available on the FTC website - www.ftc.gov.

An insurance agency that pulls an MVR in conjunction with "the underwriting of insurance," as prescribed in the FCRA, Section 604, does not need written permission. Therefore, when the commercial insured/employer sends a request to the agency to pull the MVR on a new employee in conjunction with adding the employee as a driver under the Business Auto Policy, the agency can do so without the written permission of the new employee.

In addition, to inform a commercial insured that a new driver does or does not qualify as a driver for underwriting purposes seems to be a part of "the underwriting of insurance."

However, most experts believe that if the agency shares the specific contents of an MVR with the employer, via fax or phone, the agency is no longer "underwriting insurance," but is now acting as a "consumer reporting agency," and must follow all the steps and procedures required under the FCRA.

Therefore, if the agency chooses to furnish MVRs to commercial insureds on their current or prospective employees, they may legally do so, if they follow all the requirements of a "consumer reporting agency" under the FCRA. Thus, the procedure can be "legal."

But it's not permitted. While the practice of an insurance agency furnishing MVRs to commercial insureds on their current or new employees can be "legal" under the FCRA, virtually all sources from whom the agency obtains the MVRs expressly prohibit the practice. Following are excerpts from the contracts of two MVR providers that many insurance agencies use.

MVR Company A:
"The Consumer Reports provided by Company A are for the sole and internal use of the Insurance Agency, and may not be resold, sub-licensed, delivered or displayed in any way or used by any third party. Insurance Agency certifies that it shall order, receive, disseminate and otherwise use the Consumer Reports in compliance with all applicable federal, state and local statutes, rules, codes and regulations. Insurance Agency agrees to indemnify and hold harmless Company A from any and all damages, costs, judgments and expenses."

MVR Company B:
"All reports, whether oral or written, will be kept strictly confidential; except as provided by law, no information from reports will be revealed to any person except the subject of the report. No information will be requested for the use of any other person, agency or organization except with the written permission of Company B. Reports may not be resold or transferred to any other person. The unlawful ordering or use of consumer reports can subject you to criminal and civil penalties in accordance with both federal and state laws."

Recently, one of the largest MVR Companies in the nation sent this memo to all insurance agency customers:

"It has recently come to our attention that some insurance agencies may be furnishing MVRS obtained for commercial underwriting purposes to the commercial insurance buying customer."

"Please be aware that the consumer reports you obtain from us may not be used beyond the purpose for which they were ordered and cannot be sold or given to parties outside the ordering insurance company or insurance agency."

"Allowing an employer to receive an MVR that was provided to you for commercial underwriting purposes would be a violation of law as well as a violation of your agreement with us."

Thus, the practice of an insurance agency furnishing MVRs to commercial insureds on their current or prospective employees is not permitted by most MVR providers, although the practice can be "legal" under the FCRA.

Legal experts caution insurance agencies about getting involved in employee screening on behalf of their commercial insureds. As employers, commercial insureds not only have a right to conduct background checks on employees; in today's legal climate, they almost certainly also have a duty to do so.

However, there are countless employee screening services that can conduct proper, legal and permissible background checks on employees. Agencies should refer their commercial insureds to these screening services.

It is imperative that agencies distinguish between "insurance underwriting" functions and those which cross the line into "employee screening" activities. While agencies obtain MVRs and other consumer reports as a part of underwriting, there must be clear guidelines limiting their disclosure for any other purpose.

Legal experts recommend that agencies include such a privacy guideline in their employee handbook, or agency operations manual.


Source:https://www.independentagent.com/Education/VU/Education/VU/Agency Management/Procedures/Privacy/EdwardsMVRLegal.aspx

 

[Markthebroker]

InsCommentary answered your personal lines question with a commercial lines answer. Lol. And a very long answer at that.

I've had personal lines underwriters ask about a related driver that needed to be either included or excluded, but never seen them just go ahead and run the person's mvr.

One of many reasons I have gone commercial and never looked back. But hey, anyone that wants to sell smaller premium policies with more work, don't let me stop you.

 

[Heather]

I had this done before to. They ran MVR on a niece that lived in the building, different apartment, same last name. My insured had to go to all this trouble practically begging his niece for a dec page showing she had her own insurance. The niece had a poor driving record. Niece felt it was invasion of her privacy and I agreed.

Company stated they had the right to investigate, again niece never gave them her permission. When we explained she was not in household they should have dropped it.

 

[Markthebroker]

I had this done before to. They ran MVR on a niece that lived in the building, different apartment, same last name. My insured had to go to all this trouble practically begging his niece for a dec page showing she had her own insurance. The niece had a poor driving record. Niece felt it was invasion of her privacy and I agreed.

Company stated they had the right to investigate, again niece never gave them her permission. When we explained she was not in household they should have dropped it.

One word. Shady.

 

[InsCommentary]

FCRA § 604. Permissible purposes of consumer reports [15 U.S.C. § 1681b]
(a) In general. Subject to subsection (c), any consumer reporting agency may furnish a consumer report under the following circumstances and no other:
(3) To a person which it has reason to believe
(C) intends to use the information in connection with the underwriting of insurance involving the consumer;

 

[Heather]

FCRA § 604. Permissible purposes of consumer reports [15 U.S.C. § 1681b]
(a) In general. Subject to subsection (c), any consumer reporting agency may furnish a consumer report under the following circumstances and no other:
(3) To a person which it has reason to believe
(C) intends to use the information in connection with the underwriting of insurance involving the consumer;

my issue was niece wasn't applying for insurance, she had no knowledge of her uncle shopping for insurance. I believe if they were in the same household it would have been different. Or if she was listed on a claim on a previous policy of his.

 

[InsCommentary]

Because of the insurance lobby, the insurance provision was written to be very broad. All it requires is that the inquiry be 'in connection with" the underwriting function. That could involve a mistaken belief that the person is of underwriting interest, if not as an insured, perhaps as a permissive user. Insurers were given great discretion when the law was written.

That being said, I agree with you. I had an instance recently where my insurer sent me a $592 additional auto premium billing because of a Lexis Nexis report. My son, who hasn't lived with us in 3 years, still gets his auto registration renewal mailed to our house because of problems getting mail in a large occupancy building. The presumption was that we lied about him living here, so they assigned him to the highest rated vehicle in the household and billed us. My agency CSR got it fixed, then a month later they billed us again. Welcome to the new world of big data and computer algorithms.

 

[VolAgent]

my issue was niece wasn't applying for insurance, she had no knowledge of her uncle shopping for insurance. I believe if they were in the same household it would have been different. Or if she was listed on a claim on a previous policy of his.

I believe you said same last name and same apartment building. So address was the same except the unit number?

That is pretty close, I can see where the company was coming from on that one. I can see her point, but I can always see where the underwriter went, "Yeah right, like I haven't heard this one before."