The facts of prescreened insurance offers

Have you ever wondered how insurance companies are allowed to send unsolicited offers of insurance by mail? How do companies obtain access to personal information needed to make the offer without first getting permission? Is it legal?

Here are the answers to your questions.

Yes, they are legal.

An unsolicited offer of insurance that is based upon information in a credit report is known as a prescreened offer of insurance, also known as “pre-approved” or “pre-qualified” offers. Insurers are permitted to send these unsolicited offers pursuant to the federal Fair Credit Reporting Act.

How does it work?

There are a couple of ways. An insurance company may ask a consumer-reporting agency for a list of people in a given area that meet certain criteria, such as a minimum credit score. Or, an insurance company may give the consumer-reporting agency a list of names for it to screen for those who meet certain criteria. Once the screening is complete, the company makes the offer.

Do prescreened offers count against my credit score?

No, these prescreened offers do not count against your credit score.

Must the offer include any other information?

Yes. Insurance companies sending prescreened offers of insurance must provide a short, simple and easy-to-understand statement on the first page of the offer.

The short statement must inform consumers about their right to opt out of receiving future prescreened solicitations and must provide a toll-free number for consumers to call to exercise that right. Prescreened offers also must include a longer notice that contains additional information about prescreening that is required by the FCRA.

How does opting out work?

Consumers may choose to opt out for five years or permanently by calling (888) 5-OPTOUT or by visiting www.optoutprescreen.com. They also may opt back in at any time by calling the same number or visiting the same website. Remember, if you have joint credit, both of you will have to opt out in order for it to take effect.

Will opting out hurt a consumer’s credit score?

No.

What other sources of information are available regarding prescreened offers?

The Federal Trade Commission is the governmental agency charged with enforcing the FCRA. The FTC has a consumer brochure, “Prescreened Offers of Credit and Insurance,” which explains how the prescreening process works and provides some of the benefits and consequences of receiving these offers and of opting out. For information, visit: www.ftc.gov/bcp/edu/pubs/consumer/credit/cre17.shtm.