Credit Insurance

National Credit Insurance Reports

For the past 7 years, CEJ has led the fight against abusive credit insurance charges and practices. Credit insurance (credit life, credit disabilty, credit unemployment, credit property) is insurance sold in connection with a consumer loan - either an installment loan or a revolving loan, like a credit card account.

CEJ has issued two national reports on credit insurance abuses. In 1999, CEJ and Consumers Union issued a report examining credit insurance regulation across the country. The 1999 report found that consumers had been overcharged $2 billion a year and the major cause of the overcharge was a poor job by state legislators and insurance regulators in protecting consumers. The 1999 report contains a good introduction to credit insurance and has a special section on credit property insurance. The credit property section examines laws and regulations for credit property insurance in ten states. The report also provides state-by-state premium and loss ratio data for the years 1996 through 1998.

In 2001, CEJ and the Consumer Federation of America issued another national credit insurance report that found that overcharges had increased to $2.5 billion each year (out of only $6 billion in total premium collected by insurers and lenders.) The 2001 report found that over half the states were allowing massive overcharges by failing to enforce existing laws and regulations. The 2001 report also contains sections on the role of single premium credit insurance in predatory lending and a section written by long-time consumer advocate and actuary James Hunt with advice to regulators on specific problems.

In response to CEJ’s efforts, the National Association of Insurance Commissioners and several states have taken steps to lower credit insurance rates and limit consumer abuses. From 2000 to 2002, CEJ worked with the Credit Insurance Working Group of the NAIC on the development of a new model law for credit property insurance.

State Credit Insurance Reports

CEJ has also issued a number of state-specific reports and participated in administrative hearings to win lower rates for the various credit insurance coverages. Recent efforts include Texas, California, Indiana, Arizona, Maryland and several other states. CEJ’s efforts have led to rate reductions in the hundreds of millions of dollars.