The fair credit reporting act allows insurance companies to review the credit reports of the insured since the time that it was enacted in 1972.
Enquiries made for the purpose of insurance are also treated like preapproved credit offers and hence come under the category of soft enquiries. They are not shown to the lenders in their copies of the consumer credit report and hence are also not considered in the calculation of the credit score.
Insurance companies are allowed to view the credit report of a consumer because it is believed that the credit score of a person also reflects as to whether he will be able to make the payments for the premium in the future not.
Specialised insurance credit scores have been developed recently which also provide additional analytical information to the insurer for the purpose of determining the interest-rate and that the premium amounts to charge different customers based on a different credit scores. They also can predict the likelihood of different consumers in making a claim in the future.