US 2005 Legislation regarding the Use of Credit Information in Insurance Resources in United States
US 2005 Legislation regarding the Use of Credit Information in Insurance Resources
| State: | Bill Summary: |
| Arkansas | H.B. 1315 Prohibits the use of credit information when underwriting, rating, or setting premiums for automobile insurance policies. |
| California | A.B. 1454 Imposes various requirements on an insurer that uses credit information in underwriting or rating a consumer of homeowners’ insurance, including requirements relating to denials of applications, cancellation or nonrenewal of policies, setting of rates, discrimination, prohibited credit factors, updated credit reports, and notification of adverse actions. Existing law prohibits an insurer from basing an adverse underwriting decision, as defined, on the fact that an individual has previously inquired and received information about the scope or nature of coverage under a residential fire or property insurance policy, if the information is received from an insurance-support organization whose primary source of information is insurance institutions and the inquiry did not result in the filing of a claim. This bill prohibits an insurer from reporting the fact that an insured has inquired about the nature or scope of coverage under a homeowners’ policy to a database or other record maintained by any of these insurance-support organizations if the inquiry did not result in the filing of a claim. |
| S.B. 603 Passed Senate 6/1/05 Prohibits an insurer from using credit ratings, credit reports, credit scoring models, or credit information to underwrite, classify, or rate certain insurance policies that provide coverage for loss or damage relating to automobiles; real or personal property, including loss or damage caused by fire; and residential property where the loss or damage is caused by earthquake. Prohibits an insurer from refusing to issue those policies, and from nonrenewing or canceling those policies, based upon credit grounds. |
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| Colorado | H.B. 1031 Postponed indefinitely 2/1/05 Prohibits an insurer from using credit scoring for the acceptance, denial, renewal, or rating of a potential insured for insurance underwriting purposes in connection with property and casualty insurance. |
| S.B. 5 Postponed indefinitely 1/26/05 Prohibits an insurer from using credit scoring for the acceptance, denial, renewal, or rating of a potential insured for insurance underwriting purposes in connection with property and casualty insurance. |
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| S.B. 195 Prohibits an insurer from using credit scoring for the acceptance, denial, renewal, or rating of a potential insured for insurance underwriting purposes in connection with property and casualty insurance. |
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| Delaware | S.B. 2 Prohibits the discriminatory practice of credit scoring with respect to the issuance, renewal, and risk-rating of automobile and homeowners insurance policies. |
| Illinois | H.B. 265 Signed by governor 7/19/05, Public Act 94-245 Amends the Use of Credit Information in Personal Insurance Act. Requires an insurer authorized to do business in Illinois that uses credit information to underwrite or rate risks to review and consider an exception to the insurance risk score based upon extraordinary life events after receiving written and signed notification from the applicant or insurer explaining how the applicant or insured believes the event adversely impacted the applicant’s or insured’s insurance risk score. Provides a definition of “extraordinary life event.” |
| Indiana | S.B. 148 Provides that: (1) a motor vehicle insurance rating plan may not use, as a rating factor, adverse credit report information; and (2) a motor vehicle insurer may not consider adverse credit report information in certain underwriting activities. |
| Iowa | H.F. 665 Amends Code section 515.109A to prohibit the use of credit information by insurers for underwriting or ratingrisks for personal insurance. Currently, the use of credit information for such purposes is allowed under certaincircumstances. Uses of credit information prohibited by the bill include using an insurance score; denying issuance, canceling, or refusing to renew a personal insurance policy based on any consideration of credit information; basing a consumer’s insurance renewal rates on any consideration of credit information; taking any adverse action against a consumer based on any consideration of the fact that the consumer does not have a credit card account; considering an absence of credit information or an inability to calculate an insurance score in underwriting or rating personal insurance; and taking any adverse action against a consumer based on creditinformation. For purposes of the bill, “adverse action” means a denial of issuance, cancellation, or refusal to renew, an increase in any charge for, or a reduction or other unfavorable change in the terms of coverage or amount of any personal insurance existing or applied for, or in connection with, the underwriting of personal insurance. Provides that a violation of Code section 515.109A is an unfair insurance practice as provided in Code chapter 507B and the proceedings, orders, and penalties contained in Code chapter 507B are applicable to violations of the bill. The bill is applicable to personal insurance contracts or policies delivered, issued for delivery, continued, or renewed in this state on or after October 1, 2005. |
| Kansas | S.B. 197 Repeals the Kansas Insurance Score Act, which prohibits insurance companies from using certain consumer credit information in decisions to underwrite or rate risks. |
| S.B. 198 Amends the Kansas Insurance Score Act to provide that any violation of the act would also be considered an unfair or deceptive act or practice under KSA 40-2404. Requires that any violation of the Kansas Insurance Score Act be subject to any and all of the enforcement provisions of the Kansas Consumer Protection Act. Allows persons alleging a violation of the Kansas Insurance Score Act to bring a private action to seek relief for damages caused by the violation. |
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| Massachusetts | H.B. 3056 Relates to the use of credit-based insurance scoring for underwriting and rating of insurance. |
| Michigan | H.B. 4243 Regulates the use of credit information and credit scoring in insurance. |
| H.B. 4334 Prohibits the use of credit ratings to be used to determine premium discount plans or rates for property and casualty insurance. |
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| H.B. 4374 Amends the Insurance Code (MCL 500.2111a) to rescind proposed rules that would prohibit the use of credit scoring by insurance companies to determine rates for personal insurance lines, including automobile insurance and homeowners insurance. The rules were promulgated by the commissioner of the Office of Financial and Insurance Services (OFIS), within the Department of Labor and Economic Growth (DLEG). |
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| S.B. 29 Prohibits premium discount plans to be based on the lack of credit history. |
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| S.B. 233 Amends the Insurance Code to provide that proposed administrative rules R 500.2151 through R 500.2155 (which would prohibit insurance credit scoring) would be rescinded upon their effective date, pursuant to Section 45a(3)(a) of the Administrative Procedures Act (APA). |
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| S.B. 739 Regulates the use of credit scoring in insurance. |
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| Minnesota | H.F. 1362 Prohibits credit scoring for automobile and homeowner’s insurance. |
| Mississippi | H.B. 514 Died in committee 2/1/05 Prohibits the use of credit scoring to determine whether an applicant will be eligible for a policy of insurance or eligible to open a savings or checking account at a financial institution. |
| H.B. 947 Died in committee 2/1/05 Provides that basing insurance rates or eligibility for insurance on the individual’s credit history shall be prohibited as an unfair practice in the business of insurance. |
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| Missouri | H.B. 96 Changes the laws regarding the use of credit information in underwriting auto insurance. The bill: (1) Prohibits insurers from taking any adverse action or determining a person’s insurance premium based upon a credit report or credit score; (2) Makes the restrictions on insurance credit scoring apply to property insurance and casualty insurance. Under current law, it applies to property insurance and auto insurance; (3) Broadens the definition of “credit report” to include oral communications and credit information provided by any source. Current law applies only to written and electronic communications from consumer reporting agencies; and (4) Makes it an adverse action for an insurer to offer to write an auto insurance policy through an affiliated insurer. |
| H.B. 198 Requires any person owing a fiduciary duty to an insurer who uses credit scoring in its underwriting to submit annually his or her personal credit score to the Department of Insurance. |
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| H.B. 206 Prohibits insurers from using credit information when underwriting insurance contracts. |
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| S.B. 43 Makes several changes to the laws regarding the use of credit information by insurance companies. This act modifies the definition of “adverse action” to have the same meaning as provided in federal law. Adverse actions include cancellation, denial, or non-renewal of personal insurance coverage or any unfavorable change in the terms of coverage, including charging a higher premium. This act adds several specific types of insurance products to the definition of an insurance “contract”. The current law on the use of credit information only applies automobile insurance policies and property insurance policies. Repeals a provision that allows insurers to take adverse actions against persons based on an inability to compute their insurance credit scores. Prohibits insurance companies from using loss information in calculating its insurance credit scores if it also uses loss information separately to calculate its rates. Prohibits insurers from considering an absence of credit information or the inability to calculate an insurance score in underwriting insurance. Requires insurers to use underwriting factors other than credit information to underwrite any policy that has been in force for more than 36 months. This act allows any insured to request a current credit report and a re-rating of their policy at each annual renewal. This act prohibits insurers and credit reporting agencies from using as a negative factor in underwriting any credit inquiry not initiated by the insured, collection accounts with a medical industry code, multiple credit inquiries within a 30-day period, the absence of credit history, the use of a particular type of credit or debit card, or a consumer’s total available line of credit. This act also requires insurers to file their credit scoring models or processes with the department and makes any insurer’s filing of a model or process related to credit information a trade secret and protected from public disclosure pursuant to Sections 417.450 through 417.467, RSMo. |
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| Montana | H.B. 41 Missed Deadline for general bill transmittal 3/1/05 Regulates the use of credit histories or credit scores by insurers; provides the state auditor with rulemaking authority pertaining to credit histories or credit scores; provides that the use of credit histories or credit scores applies to personal insurance; provides for notice to consumers of the use of credit histories or credit scores; provides for correction of erroneous credit histories or credit scores; requires recordkeeping by insurers; provides for indemnification of insurance producers. |
| S.B. 311 Signed by governor 4/21/05, Chapter 363 Regulates the use of credit information in personal insurance; provides the purpose, scope, and definitions for the act; establishes criteria for the use of credit information in insurance underwriting; lists conditions for underwriting or rating exceptions; providing for dispute resolution and error correction; provides for notice to consumers of the use of credit information and adverse action based on the use of credit information; requires insurers to file their credit scoring models with the commissioner of insurance; provides for the indemnification of insurance producers using scoring information; prohibits consumer reporting agencies from providing or selling certain data pertaining to a consumer’s credit. |
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| S.B. 354 Prohibits an insurer writing automobile or homeowner’s insurance from refusing to insure, refuses to continue to insure, varying rates, or limiting the scope or amount of coverage or benefits available to an individual based in any part on the insurer’s knowledge of the individual’s credit history. |
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| New Mexico | S.B. 560 Signed by governor 4/6/05, Chapter 275 Enacts the Personal Insurance Credit Information Act; regulates the use of credit information for personal insurance. |
| New York | A.B. 1321 S.B. 6372 Provides that no insurer shall take into consideration or include in any calculation or formula for the making of homeowners’ insurance rates, the credit history of any person, nor shall any person be denied homeowners’ insurance as a result of such credit history. |
| A.B. 6666 Relates to the denial of motor vehicle insurance coverage to certain persons due to credit; prohibits insurer from denying coverage to a person under the age of 25 based on such person’s credit history. |
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| A.B. 6771 Provides that the term “defined violation” shall mean the utilization by an insurer of credit information relating to a potential insured in determining the premium to be charged such insured. |
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| S.B. 4339 Provides that credit scoring for underwriting or rating shall not be used to refuse issuance or renewal of automobile and personal lines insurance policies. |
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| North Dakota | H.B. 1335 Relates to insurance credit scores. |
| Oklahoma | H.B. 1782 Relates to the Use of Credit Information in Personal Insurance Act; requires certain information be provided to a consumer. |
| S.B. 526 Relates to the Use of Credit Information in Personal Insurance Act. |
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| S.B. 676 Prohibits the use of credit information in personal insurance. |
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| Oregon | H.B. 3288 Prohibits an insurer that issues personal insurance policies from requesting or requiring a consumer’s Social Security number to issue or renew personal insurance. Prohibits an insurer that issues personal insurance policies from using a consumer’s credit history for specified purposes. Prohibits person from disclosing, selling or making available an individual’s identifying information. Provides exceptions. Makes a violation an unlawful trade practice. |
| S.B. 573 Signed by governor 7/7/05, Chapter 309 Prohibits an insurer from rerating an existing policy or customer based on the customer’s credit history or credit history component of the customer’s insurance score when the marital status of a customer changes due to death or divorce. |
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| S.B. 624 Prohibits an insurer that issues personal insurance policies from using a consumer’s credit history to cancel, nonrenew, decline coverage, calculate insurance score, determine premiums or set payment plan for personal insurance. |
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| Pennsylvania | H.B. 57 Amends the Unfair Insurance Practices Act of 1974; prohibits an insurance provider from denying, refusing to issue, refusing to renew, refusing to reissue or canceling or terminating an insurance policy, adding a surcharge or a rating factor or other underwriting standard because the insured has a credit rating unsatisfactory to the insurer. |
| H.B. 1060 Creates the Use of Credit Information in Personal Lines Insurance Underwriting Act. |
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| H.B. 1098 Amends the Unfair Insurance Practices Act of 1974; prohibits an insurance provider from denying, refusing to issue, refusing to renew, refusing to reissue or canceling or terminating an insurance policy, adding a surcharge or a rating factor or other underwriting standard because the insured has a credit rating unsatisfactory to the insurer. |
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| H.B. 1102 Amends the Unfair Insurance Practices Act of 1974; prohibits an insurance company from canceling or denying motor vehicle insurance coverage based solely on the basis of a credit rating, credit history or credit scoring model. |
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| H.B. 1128 Provides for the use of credit history of insureds. |
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| S.B. 286 Prohibits the use of credit scoring information in automobile insurance. |
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| S.B. 287 Creates the Credit Scoring Prohibition Act. |
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| S.B. 566 Provides for the use of credit history of insureds. |
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| Rhode Island | H.B. 5156 Prohibits the use of credit reports in connection with a consumer’s application for insurance. |
| South Carolina | S.B. 316 Provides that an individual with no credit history may not be assessed a premium surcharge for this reason by an insurance company doing business in this state for any line of insurance. |
| Tennessee | H.B. 579 S.B. 1797 Prohibits insurance companies from using credit scores to deny coverage or escalate cost of premiums. |
| H.B. 875 S.B. 667 Prohibits insurance company from using a consumer’s credit rating in underwriting personal insurance. |
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| Texas | H.B. 23 S.B. 167 Prohibits the use of credit information for insurance underwriting and rating in Texas. |
| H.B. 379 Relates to the use of the credit score of a consumer who does not have debt for certain purposes; provides penalties. |
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| H.B. 700 Relates to the contents of consumer credit reports and to an insurer’s use of credit scores in rating policies providing personal insurance coverage. |
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| Vermont | H.B. 301 Prohibits unfair discrimination on the basis of credit history by insurers. |
| S.B. 61 Regulates the use of credit information for personal insurance to protect consumers. |
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| Washington | H.B. 1927 S.B. 5328 Provides that the use of a person’s credit history or credit score as a factor in underwriting, renewal, cancellation, and premium decisions by insurers for personal insurance is prohibited in this state. |
| H.B. 1928 S.B. 5275 Passed Senate 3/3/05 Provides that, at renewal, an insurer shall not use a policyholder’s updated credit history to determine premium when the updated credit history is less favorable to the policyholder than the prior credit history. Nothing in this act shall be construed to prevent an insurer from using factors other than a policyholder’s updated credit score in determining premium increases, or to prevent inclusion of a policyholder’s prior credit history in premium decisions at renewal. |
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| West Virginia | H.B. 2077 Prohibits the use of a credit score in casualty insurance rate filings. |
| H.B. 2354 Prohibits insurers from using credit reports to raise insurance rates. |
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| H.B. 2863 Prohibits the use of credit scoring as a consideration in calculating insurance rates in homeowners or automobile liability policies. |
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| H.B. 3311 Prohibits the number of inquiries reflected in a credit report, credit score report or CLUE report from adversely affecting an application for insurance; and, prohibits reliance on information which is false or potentially false. |
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| S.C.R. 7 Requests the Joint Committee on Government and Finance study the use of credit scoring in the insurance underwriting and rate-making process. |
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