US 2002 Legislation regarding the Use of Credit Information in Insurance Resources in United States
US 2002 Legislation regarding the Use of Credit Information in Insurance Resources
| State: | Bill Summary: |
| Alabama | S.B. 392 Prohibits an insurer from making an underwriting decision based on a credit report. Allows an insurer to refuse to accept premium payments in installments from a person whose nonpayment of premiums caused a lapse in an insurance policy of the person within two years preceding the date on which the request to pay premiums is made. Provides for the imposition of civil penalties against insurers who violate this act. |
| Alaska | H.B. 395 Prohibits discrimination by credit rating or credit scoring in insurance rates. |
| S.B. 286 Prohibits discrimination in insurance rates based on credit rating or credit scoring. |
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| S.B. 320 Prohibits discrimination in insurance rates based on credit rating or credit scoring. |
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| Arizona | H.B. 2138 Stipulates that renewals for homeowner policies shall not be based in whole or in part on credit history for a policyholder that has not had a claim in the previous ten years. Provides that an insurer may not fail to renew a homeowner’s policy based solely on the policyholder’s credit history if they have not filed a claim in the previous five years. |
| H.B. 2141 Prohibits the denial of an application, non-renewal or increased premiums because of a residential property insurance applicant or policyholder’s credit history. |
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| H.B. 2385 Requires that an insurer notify an applicant or policyholder that the insurer intends to use credit scoring information in connection with the underwriting or rating of homeowners or private passenger motor vehicle insurance. |
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| H.B. 2386 Signed by governor 5/29/02, Chapter 292 Establishes that assigning an applicant or policyholder to a higher rating tier or failing to apply a premium discount based on a consumer report, insurance score or absence of credit history is an adverse underwriting decision. Clarifies that it is “credit related” information derived from a consumer report that would initiate the disclosure requirements contained in the bill. Defines insurance score. Requires an insurance company to reconsider its underwriting decision based on corrected information provided by the consumer. Stipulates that the insurance institution shall notify the consumer that the adverse underwriting decision was based in part on the use of a consumer report or absence of credit history. States that the insurance institution shall disclose the source of the consumer report and provide them with information on how to obtain a copy of the report. Outlines items relative to an individual’s credit history that affect a consumer report. |
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| S.B. 1018 Establishes disclosure requirements for providing consumers with information regarding the use of credit information for insurance underwriting purposes. |
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| California | A.B. 5 Prohibits an insurer from using credit ratings, credit reports, credit scoring models, or credit information to underwrite, classify, or rate certain automobile and property insurance policies. The bill would also prohibit an insurer from refusing to issue those policies, or from nonrenewing or canceling those policies, based upon credit grounds. |
| Connecticut | S.B. 451 Failed Joint Favorable deadline 3/14/02 Prohibits automobile insurers from using credit history as an underwriting factor unless such credit history concerns the payment of automobile insurance premiums. |
| Delaware | H.R. 85, First Special Session Passed House 7/1/02 Addresses the use of credit scoring by property and casualty insurers. It recognizes the work of the Insurance Commissioner in protecting the Delaware insurance-buying public with respect to the use of credit scoring in automobile and home owners’ policies and requests that the Insurance commissioner continue to participate nationally and act locally to promulgate protective regulations at the earliest possible time. |
| S.C.R. 35 Passed Senate 6/30/02 Requests that the insurance commissioner promptly consider and enact regulations relating to the proper use of credit scoring by insurers in the state of Delaware. |
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| Georgia | H.B. 1115 Relates to regulation of insurance rates, underwriting rules, and related organizations, so as to comprehensively regulate the use of credit reports, credit scores, and insurance scores in connection with the underwriting of motor vehicle insurance policies; provides definitions; provides for the filing of credit scoring models, methods, and programs; provides for licensing; provides notice to insureds regarding use of credit scoring; limits the use of certain data in credit scoring; requires disclosure of reasons for adverse actions based upon credit scoring; provides for appeals; requires that certain records be maintained; limits certain financial interests by insurers in credit scoring and reporting entities; amends Code §33-39-2, relating to the applicability of obligations imposed by Chapter 39 of Title 33, so as to require compliance with the provisions of this Act by entities using credit scoring. |
| Idaho | S.B. 1323 Adds to existing law to provide that no insurer regulated pursuant to Title 41, Idaho Code, shall charge a higher premium or cancel a policy or coverage based primarily upon an individual’s credit rating or credit history; and to provide an exception for surety insurance contracts. |
| S.B. 1408 Signed by governor 3/25/02, Chapter 264 Adds to existing law to provide that no insurer regulated pursuant to Title 41, Idaho Code, shall charge a higher premium or cancel a policy or coverage based primarily upon an individual’s credit rating or credit history; to define “based primarily”; and to limit application to certain property or casualty insurance. |
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| Illinois | H.B. 3780 Amends the Illinois Insurance Code. Makes technical changes in a section relating to the use of credit reports. |
| S.B. 1910 Amends the Illinois Insurance Code. Provides that insurers may not establish premium rates for homeowners or renters insurance that are based upon the insured’s or applicant’s credit report or credit score. |
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| Indiana | H.B. 1074 Prohibits an insurer from using a credit score in calculating the premium on a property and casualty insurance policy and makes a violation an unfair and deceptive act and practice. |
| H.B. 1164 Passed House 2/5/02 Imposes certain requirements and restrictions concerning the use of credit information in the underwriting of property and casualty insurance. Makes a willful violation of the requirements an unfair and deceptive act and practice in the business of insurance. |
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| H.B. 1384 Imposes certain requirements and restrictions concerning the use of credit information in the underwriting of property and casualty insurance. Makes a violation of the provisions an unfair and deceptive act and practice in the business of insurance. |
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| S.B. 145 Provides that a motor vehicle: (1) insurance rating plan may not use, as a rating factor, adverse credit report information; and (2) insurer may not consider adverse credit report information in certain underwriting activities. |
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| S.B. 409 Passed Senate 2/4/02 Imposes certain requirements and restrictions concerning the use of credit information in the underwriting of property and casualty insurance. Excludes commercial lines of insurance from the requirements and restrictions. Makes a violation of the requirements and restrictions an unfair and deceptive act and practice in the business of insurance. |
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| Kansas | S.C.R. 1623 Adopted Requests the Insurance Commissioner to form a task force to study the use of insurance scoring reports within the insurance industry and the need for additional regulation of that activity, if any. |
| Maryland | H.B. 37 Extends the termination of specified provisions relating to discrimination in underwriting based on credit history and to confidentiality of certain programs and models used for credit rating purposes. |
| H.B. 521 Signed by governor 5/16/02, Chapter 580 Prohibits an insurer, with respect to homeowner’s insurance, from refusing to underwrite, cancel, or refuse to renew a risk based on a specified credit history; prohibits an insurer, with respect to private passenger motor vehicle insurance, from refusing to underwrite, cancel, refuse to renew, or increase the renewal premium based on a specified credit history; provides for the termination of specified provisions of the Act. |
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| H.B. 1002 Signed by governor 5/16/02, Chapter 553 S.B. 605 Requires an insurer that provides a private passenger automobile insurance policy to provide information about policy premiums to a policyholder at specified times; prohibits an insurer from requiring a particular payment plan for an insured based on the credit history of the insured; requires an insurer that markets private passenger automobile insurance through insurance producers to make a copy of a specified statement available to its producers; requires a notice of proposed adverse action to contain specified information. |
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| S.B. 157 Prohibits an insurer from refusing to underwrite a homeowner’s insurance risk solely because of the credit history of the applicant or named insured; prohibiting an insurer from cancelling or amending a written agreement with an independent insurance producer because of the credit history of an applicant or named insured; repeals specified provisions requiring the Insurance Commissioner to conduct a study and submit a report. |
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| Michigan | H.B. 5882 Amends the insurance code to prohibit an insurer from establishing or maintaining premium discount plan based in whole or in part upon an applicant’s or insured’s credit history or lack of credit history. |
| H.B. 6240 Prohibits the use of credit ratings in premium discount plans. |
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| S.B. 1227 Prohibits the use of credit ratings in premium discount plans. |
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| S.B. 1407 Prohibits the use of credit ratings in premium discount plans. |
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| Minnesota | H.F. 2492 Indefinitely postponed 3/19/02 S.F. 2363 Signed by governor 5/1/02, Chapter 357 Limits the use of credit information; regulates trade practices. |
| H.F. 2784 S.F. 2548 Prohibits an insurer from requesting or using the credit history, credit report, credit score, or any other credit information of any applicant for coverage or of any current insured for the purposes of underwriting, determining the premium rate, or any other purpose. This section does not apply to insurance sold to a business. |
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| H.F. 3425 Indefinitely postponed 3/13/02 S.F. 3345 Requires every insurer writing private passenger automobile insurance regulated under chapter 65B or homeowners insurance regulated under chapter 65A that uses credit scoring for underwriting purposes to make available to its licensed insurance producers, as defined in section 60K.31, procedures to obtain credit information and credit scores on insureds or applicants including guidelines for compliance with state and federal credit reporting requirements and privacy laws. |
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| Missouri | H.B. 1502 Signed by governor 7/12/02 Restricts how insurers may use an applicant’s credit information in their underwriting practices for automobile and property insurance. Prohibits insurers from taking an adverse action against an applicant or insured based upon credit information when: (1) Credit information is the only underwriting factor; (2) Using information contained in a credit report that the insurer knows to be in dispute; or (3) Renewing a contract, until the third anniversary date of the contract. Defines adverse action. Prohibits insurers from: (1) Providing credit information to third parties, unless specifically authorized by the federal Fair Credit Reporting Act; and (2) Using the number of insurance inquiries an applicant makes as a negative factor in their insurance scoring formulas. Requires insurers to: (1) Inform the applicant, at the time of application, if credit information may be used as an underwriting factor; (2) Inform the applicant about his or her rights regarding credit information when a credit report adversely affects the applicant; and (3) Provide to the applicant or insured a statement of reasons for taking any adverse action which was based upon credit information if the insured or applicant requests a statement within 30 days of the adverse action. The statement must be clear and specific, so that a person of average intelligence can identify the basis for the insurer’s decision without further inquiry. Applicants and insureds may request reevaluation within 30 days following any correction to their credit report. Allows the Department of Insurance to pursue civil forfeitures of up to $100 for each violation by an insurer. The bill applies to insurance contracts entered into on or after July 1, 2003. |
| H.B. 1821 Limits the way in which insurers may use credit information in their underwriting process and establishes several restrictions and prohibitions on the improper termination of insurance coverage. |
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| S.B. 981 Prohibits insurance companies from using an individual’s lack of an established credit history in denying or refusing to renew insurance coverage. An insurer cannot cancel, refuse to write, or refuse to renew a policy or base an adverse underwriting decision because person does not have an established credit history. An insurance company which violates this section is guilty of an unfair trade practice. The provisions of this act will apply to insurance policies entered into on or after January 1, 2003. |
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| S.B. 1215 Limits insurers’ use of credit in their underwriting process and establishes restrictions on termination of insurance. |
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| New Hampshire | S.B. 126 Declares that an established automobile or homeowners insurance policy cannot be changed based in whole or in part on a change in credit rating or credit status of an insured. Any change in such policies shall be directly related to the record of the insured. |
| New Jersey | A.B. 2735 Prohibits property and casualty insurers doing business in New Jersey from using information from an individual’s consumer report or credit score as an underwriting factor in determining the individual’s premium rate, whether to decline or terminate an individual’s coverage, or whether to limit the amount or type of coverage. Defines “credit report” as any written, oral or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for credit or insurance. The term “credit score” is defined as a numerical value or categorization derived from a statistical tool or modeling system used to predict the likelihood of certain credit behaviors. Because it is unclear whether credit information is being properly utilized by insurers, this bill prohibits insurers from using that information in the underwriting process. |
| New York | A.B. 1785 Prohibits insurers from refusing to issue a motor vehicle liability insurance policy or renew an existing policy to any person solely on the basis of the credit history of the named insured or applicant. |
| S.B. 6584 Prohibits insurers from refusing to issue a motor vehicle liability insurance policy or renew an existing policy to any person in whole or in part on the basis of the credit history of the named insured or applicant; prohibits the use of a computerized database for such purpose. |
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| S.B. 6626 Prohibits insurers from refusing to issue a motor vehicle liability insurance policy or renew an existing policy to any person solely or in part based on the credit history of the name insured or applicant. |
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| Ohio | H.B. 519 Regulates the use of credit scoring in determining rates for motor vehicle insurance and to require the Department of Insurance to study the impact of insurers’ use of credit scoring on motor vehicle insurance rates. |
| S.B. 314 Prohibits an insurer’s use of a credit history or credit score in fixing a premium rate for, or the terms and conditions of, an insurance policy, or in determining whether to issue, continue, or renew an insurance policy. |
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| Pennsylvania | H.B. 2592 Prohibits the use of credit scoring in insurance. |
| S.B. 1456 Provides for use of credit history of insureds; and further provides for penalties imposed by Insurance Department. |
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| S.B. 1588 Prohibits the use of credit scoring in insurance. |
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| S.B. 1589 Creates the Credit Scoring Prohibition Act. |
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| Rhode Island | H.B. 6610 Prohibits the use of credit reports in connection with a consumer’s application for insurance. |
| H.B. 8027 Enacted 6/28/02, Chapter 303 Allows the use of an individual’s credit existing by an insurer for insurance scoring in reading and underwriting under certain conditions. |
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| S.B. 2348 Passed Senate 5/31/02 Allows the use of an individual’s credit existing by an insurer for insurance scoring in reading and underwriting under certain conditions. |
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| South Carolina | H.B. 4398 Relates to the prohibition on automobile insurers and agents from refusing to issue, or renew, automobile insurance policies due to certain factors, factors prohibited in determining premium rates, requirements for cancellation, and penalties for violations, so as to prohibit the use of creditworthiness as a factor in refusing to issue or renew a policy of automobile insurance and to prohibit the use of creditworthiness in determining automobile insurance policy premium rates. |
| H.B. 4458 Adds a definition for “credit score”, amend §38-73-740, relating records and in determining classifications and rates of applicants for automobile insurance which must be maintained by automobile insurers for at least three years, so as to delete references to investigative and credit reports; and amends §§38-77-122 and 38-77-123, relating to the prohibition on automobile insurers and agents from refusing to issue, or renew, automobile insurance policies due to certain factors, factors prohibited in determining premium rates, requirements for cancellation, and penalties for violations, so as to prohibit the use of credit score as a factor in refusing to issue or renew a policy of automobile insurance and to prohibit the use of credit in determining automobile insurance policy premium rates. |
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| H.B. 4734 Relates to automobile insurance, so as to establish provisions for using credit information in making underwriting and rate making decisions. |
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| S.B. 798 Relates to the prohibition on automobile insurers and agents from refusing to issue or renew automobile insurance policies due to certain factors, factors prohibited in determining premium rates, requirements for cancellation, and penalties for violations, so as to prohibit the use of creditworthiness as a factor in refusing to issue or renew a policy of automobile insurance and to prohibit the use of creditworthiness in determining automobile insurance policy premium rates. |
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| S.B. 1032 Prohibits an insurance company from considering an individual’s credit rating in determining an individual’s insurance rate for any line of insurance. |
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| South Dakota | H.B. 1117 Provides rule-making authority regarding the use of credit histories by insurers when underwriting or rating certain insurance applications or renewing insurance policies. |
| Tennessee | H.B. 2075 S.B. 2147 Prohibits insurance company doing business in this state from basing rates to be charged for any type of insurance on person’s credit rating or report. |
| Utah | H.B. 110 Signed by governor 3/26/02, Chapter 221 Modifies the Insurance Code to regulate the use of certain credit information in making insurance decisions related to motor vehicle insurance. |
| Vermont | H.B. 734 Prohibits unfair discrimination by insurers on the basis of credit history. |
| Virginia | S.B. 272 Withdrawn from further consideration 2/4/02 Prohibits insurers and agents from setting rates or making policy issuance and renewal decisions for motor vehicle insurance, homeowners insurance, and renters insurance on the basis of a person’s credit history, lack of credit history, or credit score. |
| Washington | H.B. 2544 Signed by governor 4/4/02, Chapter 360 S.B. 6524 Restricts the use of credit history for insurance purposes. Requires the commissioner to report to the Legislature by January 1, 2004, on issues related to the use of credit history in personal insurance underwriting and rating and the implementation of this act. The report must include: (1) A review of how this act has been implemented and how it has impacted consumers; and (2) A review and analysis of insurance scoring that is due to the legislature by January 1, 2003, which includes, but is not limited to: (a) Which types of consumers, based on demographic factors, benefit from or are harmed by the use of credit history in personal insurance rating and underwriting; (b) The extent to which the use of credit history affects rates charged to the consumer; (c) Whether insurance scoring results in discrimination against a protected class of people or the poor; and (d) Other issues as determined by the commissioner. |
| H.B. 2763 Provides that a person’s credit history or insurance score shall not be a factor considered by an insurer in any decision to underwrite, deny, cancel, or refuse to renew a policy of personal insurance. |
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| Wisconsin | A.B. 774 Failed to pass pursuant to Senate Joint Resolution 1 3/26/02 Prohibits the use of information in credit reports for issuing or setting premiums for motor vehicle insurance. |
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