RE: Use of Social Security Number to Obtain Insurance Quote
1. Are automobile insurance premiums based solely upon an individuals driving record?
2. May an insurer obtain an applicant's social security number in order to give an insurance quote?
3. What steps does an insurer need to take to protect the privacy of insureds and applicants?
1. No, there are a number of factors, including the applicants driving record that determines an automobile insurance premium.
2. There is no law prohibiting insurers from requesting a social security number. An insurer has the right to ask for a social security number where the information is reasonably related to underwriting. One such purpose is to obtain a credit report of an insured.
3. The use of the social security number is subject to the requirements of the Department's Privacy Regulation, N.Y. Comp. R. & Regs. tit. 11 Part 420 (2001) (Reg. 169) and N.Y. Comp. R. & Regs. tit. 11 Part 421 (2002) (Reg. 173).
The inquirer states that the inquirer requested auto insurance quotes from the inquirers local insurance agent who informed the inquirer that he needed the inquirers social security number to obtain the quotes. The inquirer would like to know why insurers need the social security numbers, and whether driving records are the only factor that determines an automobile insurance premium. Second, is it mandatory to give the social security number, and finally what steps must an insurer take to protect the privacy of the insureds and applicants.
The factors that go into a premium for an applicant are not limited to the applicants driving record. There are a number of factors that insurers may use to determine an automobile insurance premium, including an applicants driving record, place of residence,
use of the vehicle, and creditworthiness.
While the Social Security Act limits the circumstances under which a state may require an individual to provide his or her social security number, 42 U.S.C.A. § 405(c)(2)(C)(i)(West 2003), there is no such prohibition directed at private entities in this regard. Nor is there a New York law that prohibits insurers from requiring and utilizing the social security numbers of insureds for a legitimate underwriting purpose. One such legitimate purpose is to obtain a credit report of the insured. The Insurance Law allows insurers to use creditworthiness in underwriting risks of insureds subject to the limitations found in N.Y. Ins. Law. Article 28 (McKinney 2006 Supp.) & N.Y. Comp. R. & Regs. tit. 11 Part 221 (2005) (Reg. 182).
When an applicant furnishes his or her social security number to an insurer, the use of this information by the insurer is subject to the requirements of the Department's Privacy Regulation, N.Y. Comp. R. & Regs. tit. 11 Part 420 (2001) (Reg. 169) and N.Y. Comp. R. & Regs. tit. 11 Part 421 (2002) (Reg. 173). Some examples of this regulation include the obligation of insurers to send out a yearly statement that is clear and concise and explains the companys privacy practices and policies. There are limits placed on what the insurer can disclose to third parties. More specific information on the privacy regulations can be found at the Departments website at www.ins.state.ny.us where this information can be accessed in the "Privacy Regulations" section.
Finally while it is not mandatory for an applicant to provide his or her social security number to an insurer, the insurer may in turn not give an insurance quote and/or issue an insurance policy.
For further information one may contact Principal Attorney Paul A. Zuckerman at the New York City Office.