Rhode Island examines privacy issues and insurance
Rhode Island may join states that have already addressed privacy issues when it comes to using credit histories to decide the risk in selling an insurance policy to a particular consumer.
See the biggest insurance problems across the country
Rhode Island's legislature is in the process of reviewing a bill that would restrict insurance companies' use of consumer credit histories to determine rates. Many states have asserted that the use of credit reports borders on discrimination, since poorer consumers are less likely to have credit histories, forcing them into a higher risk rate category.
Many states have adopted legislation that prevents credit card companies, credit report providers, and insurers from sharing an individual's personal financial information with other businesses, without express permission from the consumer.
Individual state legislation comes on the heels of the federal Gramm-Leach-Bliley Act that went into effect July 1, 2001. The act imposes privacy obligations on companies, including insurance and credit card companies, that hold confidential, nonpublic information about their clients. Companies are required to notify consumers that they can choose not to allow the companies to share this information with other parties.