US 2007 Legislation regarding the Use of Credit Information in Insurance Resources in United States
US 2007 Legislation regarding the Use of Credit Information in Insurance Resources
| State: | Bill Summary: |
| Arizona | H.B. 2509 Requires an insurer to offer to an individual the best rate available that the insurer offers in that area based on the insurance score that is calculated assuming the individual has the best credit history that is used to calculate that insurer’s insurance score on an individual. |
| Arkansas | H.B. 1062 Withdrawn 3/5/07 Prohibits the use of credit information when underwriting, rating, or setting premiums for automobile insurance policies. |
| Connecticut | S.B. 56 Failed Joint Favorable deadline 3/15/07 Requires each insurance company that issues personal automobile liability and homeowners insurance policies in this state to disclose to consumers whether or not such insurance company is using the credit histories of the consumers in its underwriting practices for such insurance policies. |
| Delaware | S.B. 31 Substituted 5/9/07 Prohibits the practice of “credit scoring” in setting premiums for automobile and homeowners insurance in Delaware, and in denying applications for automobile and homeowners insurance in Delaware. |
| S.S. 1 for S.B. 31 Signed by governor 8/1/07, Chapter 175 Creates restrictions upon the use of credit information in the provision of insurance for automobiles, motorcycles, boats and personal watercraft, recreational vehicles, homeowners, and certain other types of insurance. The Department of Insurance is charged with promulgating regulations to implement the Act. |
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| Illinois | H.B. 332 Amends the Residential Mortgage License Act of 1987. In a section concerning lending procedures, provides that a licensee may not deny an application for a mortgage solely on the basis of credit information of prospective customers. Provides that if a licensee denies a mortgage application based on credit information, it must provide the affected party with an explanation for the licensee’s action and an opportunity for the affected party to explain its credit information. Amends the Use of Credit Information in Personal Insurance Act. In a section concerning the use of personal credit information, provides that if an insurer denies, cancels, or does not renew a policy of personal insurance based on credit information, it must provide the affected party with an explanation for the insurer’s action and an opportunity for the affected party to explain its credit information. Amends the Public Utilities Act. Provides that a public utility may not deny, cancel, or nonrenew utility service solely on the basis of credit information of prospective or existing customers. Provides that if a public utility denies, cancels, or does not renew service based on credit information, it must provide the affected party with an explanation for the public utility’s action and an opportunity for the affected party to explain its credit information. |
| Indiana | H.B. 1421 Removes a provision prohibiting an insurer that uses credit information to underwrite or rate personal insurance risks from using the credit information unless the insurer recalculates the insurance score or obtains a new credit report at least once every 36 months, except in certain circumstances. |
| H.B. 1817 Prohibits use of credit information in connection with insurance coverage. Repeals certain statutes concerning use of credit information by insurers in connection with the issuance of a personal insurance policy. |
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| Iowa | H.F. 216 Amends Code section 515.109A to prohibit the use of credit information by insurers for underwriting or ratingrisks for personal insurance. 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. The bill 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, 2007. |
| S.F. 283 Amends Code §515.109A to prohibit the use of credit information by insurers for underwriting or rating risks for personal insurance. 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 credit information. 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 §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, 2007. |
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| Kentucky | H.B. 111 Creates a new section of Subtitle 13 of KRS Chapter 304 to prohibit an insurer from rating a risk based, in whole or in part, on the credit history of the applicant or insured in any manner, including the provision or removal of a discount, assigning the insured or applicant to a rating tier, or placing an insured or applicant with an affiliated company; applies to property and casualty insurance contracts covering personal risks issued or renewed on or after the effective date of this Act. |
| Maine | L.D. 419 Passed House 4/19/07 Prohibits insurers from denying, canceling or refusing to renew personal insurance in whole or in part on the basis of an insured’s credit information. The bill also prohibits insurers from considering more than one credit inquiry from mortgage or automobile lenders for inquiries made within 30 days of one another. Requires insurers that use credit reports and credit scores in insurance underwriting to obtain an updated credit report to recalculate an insured’s insurance scope and to reunderwrite and rerate the insured. The bill requires insurers to act upon the request of the insured within 30 days of the request, but does not require an insurer to do so more than once every 12 months. The bill provides that any adjustments in the policy premium be made at the time of renewal. Requires insurers that use credit scores to disclose to insureds that the insured’s premium is either higher or lower based upon the insured’s credit-based insurance score and notify the insured of that insurance score. |
| L.D. 1083 Signed by governor 5/8/07, Chapter 74 Requires an insurer that uses consumer reports in insurance underwriting to obtain an updated credit report, recalculate the insured’s insurance score and reunderwrite and rerate the insured. An insurer must take these steps within 30 days of receiving the insured’s request but need not do so more often than once in any 12-month period. Changes in premium do not become effective until the current policy’s renewal. |
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| Massachusetts | H.B. 1010 Relates to the use of credit-based insurance scoring for underwriting and rating insurance. Provides that any insurer that used credit information, including insurance scores, in its rating plan or tier placement plan shall file with the commissioner written standards governing the insurer’s use of credit information. Prohibits an insurer from utilizing credit information in its rating plan or tier placement plan until such time as the insurer has filed the written standards with the commissioner Prohibits an insurer that utilized credit information, including insurance scores, in its rating plan or tier placement plan from using such credit information as the sole basis for a decision to deny, cancel, or non-renew any person’s insurance coverage. |
| H.B. 1023 Defines credit information as any credit related information whether obtained as a credit history, a credit report, a consumer report, a credit score, an insurance score or any other compilation or collection of a person’s credit. Provides that credit information may not be used as a rating factor in the calculation of premiums for private passenger automobile insurance. |
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| H.B. 1091 Relates to the use of credit-based insurance scoring for underwriting and rating insurance. Provides that any insurer that used credit information, including insurance scores, in its rating plan or tier placement plan shall file with the commissioner written standards governing the insurer’s use of credit information. Prohibits an insurer from utilizing credit information in its rating plan or tier placement plan until such time as the insurer has filed the written standards with the commissioner Prohibits an insurer that utilized credit information, including insurance scores, in its rating plan or tier placement plan from using such credit information as the sole basis for a decision to deny, cancel, or non-renew any person’s insurance coverage. |
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| Michigan | H.B. 4070 Creates a new Chapter 21A of the Insurance Code addressing the use of credit information and credit scores in the transaction of personal insurance. |
| H.B. 4169 Prohibits the use of credit ratings to be used in premium discount plans or rates for property and casualty insurance. |
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| H.B. 4412 Generally, prohibits an insurance company from using an insurance score (credit score) as a rating factor or as a basis for refusing to insure or for limiting coverage. This would apply to new and renewal personal insurance policies effective as of July 1, 2007. The bill also requires the adjustment of base rates using a formula provided in the bill that takes account of the elimination of insurance score discounts. Insurance companies would need to certify to the insurance commissioner by May 1, 2007, that they had made the adjustments. |
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| H.B. 5565 Regulates the use of credit information and credit scoring. |
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| S.B. 234 Signed by governor 10/31/07, Public Act 118 Provides appropriations for the Department of Labor and Economic Growth. Provides that the department shall not expend funds from the appropriations in part 1 for the office of financial and insurance services for the purpose of implementing prohibitions on the use of credit scoring in establishing insurance premiums by insurance companies until the legislature has, by statute, authorized such a prohibition. |
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| S.B. 659 Excludes medical industry codes and prohibits the use of no-fault claims to as a negative factor in any insurance score or in reviewing credit information to increase premiums. |
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| Minnesota | H.B. 48 Prohibits the use of consumer credit scores or history by insurers in underwriting automobile insurance policies. |
| Mississippi | H.B. 383 Died in committee 1/30/07 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. |
| S.B. 2901 Died in committee 1/30/07 Prohibits insurers from using information regarding a consumer’s creditworthiness, credit standing or credit capacity for the purpose of determining rates for insurance or eligibility for coverage. |
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| Missouri | H.B. 140 Prohibits insurers from using a person’s credit report or credit scoring when underwriting an insurance contract. |
| H.B. 561 Prohibits insurers from using a person’s credit report or credit scoring when underwriting an insurance contract. |
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| H.B. 592 Requires each fiduciary of an insurer who uses credit scoring in underwriting to annually submit to the Department of Insurance, Financial Institutions, and Professional Registration its credit score and the amounts paid to it for pensions, bonuses, and forgivable loans. |
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| H.B. 650 Changes the laws regarding the use of credit information when underwriting insurance contracts. In its main provisions, the bill: (1) Revises the definition of “adverse action” to have the same meaning as federal law including cancellation, denial, and nonrenewal of personal insurance coverage and creating an unfavorable change in the terms of coverage, including charging higher premiums; (2) Changes the definition of “contract” as it relates to automobile insurance policies; (3) Prohibits insurers from using a credit score derived from using a person’s income, gender, address, heritage, marital status, or education. The absence of credit information or an inability to calculate a score cannot be used when underwriting insurance; (4) Prohibits insurers from using credit information to underwrite a policy after it has been in force for 36 months, unless there is a substantial change in the risk based on other rating factors; (5) Allows the consumer, at his or her annual renewal, to request the insurer re-underwrite the policy based on a current credit report; (6) Prohibits insurers and credit reporting agencies from using as a negative factor in underwriting: (a) Credit inquiries not initiated by the insured; (b) Medical collection accounts; (c) Multiple credit inquiries; (d) Absence of credit history; (e) Use of certain credit cards; or (f) Consumer’s total available line of credit; and (7) Requires insurers to file their credit scoring models with the Department of Insurance, Financial Institutions, and Professional Registration. |
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| S.B. 98 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 to automobile insurance policies and certain property insurance policies. This act would apply the consumer credit protection to a variety of homeowner policies, automobile policies, motorcycle policies, and various watercraft policies. This act repeals a provision that allows insurers to take adverse actions against persons based on an inability to compute their insurance credit scores. Insurers are prohibited from using insurance credit scores to underwrite or rate risks that use income, gender, address, zip code, ethnic group, religion, marital status, education level, or nationality of the consumer as a factor. The act prohibits insurance companies from using loss information in calculating its insurance credit scores if it also uses loss information separately to calculate its rates. This act prohibits insurers from considering an absence of credit information or the inability to calculate an insurance score in underwriting insurance. This act requires insurers to use underwriting factors other than credit information to underwrite any policy that has been in force for more than 36 months unless there is a substantial change in the risk based upon non-credit underwriting factors. 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 an insurance policy the following: (1) Any credit inquiry not initiated by the insured; (2) Collection accounts with a medical industry code; (3) Multiple credit inquiries from the home mortgage industry or automobile lending industry within a 30-day period; (4) The absence of credit history; (5) The use of a particular type of credit or debit card’ or (6) 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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| S.B. 340 Prohibits insurers from taking adverse action based upon a person’s credit report. The current law allow insurers to use credit reports under certain conditions. The notification and procedural aspects of the current law are eliminated as insurers are totally prohibited from taking adverse actions in toto. The act also 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 to automobile insurance policies and certain property insurance policies. This act applies to a variety of homeowner policies, automobile policies, motorcycle policies, and various watercraft policies. The act also applies to professional liability and malpractice liability policies. |
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| Montana | H.B. 212 Tabled in committee 1/19/07 Prohibits an insurer writing automobile insurance from refusing to insure, refusing 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; repeals the Montana Use of Credit Information in Personal Insurance Act. |
| S.B. 331 Missed Deadline for General Bill Transmittal 2/28/07 Prohibits an insurer writing automobile insurance from refusing to insure, refusing 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; repeals the Montana Use of Credit Information in Personal Insurance Act. |
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| S.B. 429 Missed Deadline for General Bill Transmittal 2/28/07 Prohibits an insurer writing homeowner’s insurance from refusing to insure, refusing 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; repeals the Montana Use of Credit Information in Personal Insurance Act. |
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| Nevada | A.B. 404 Signed by governor 5/31/07, Chapter 218 Existing law regulates the use by an insurer of the credit information of a policyholder or an applicant for insurance. (NRS 686A.600-686A.730) In particular, existing law requires an insurer who takes an adverse action against an applicant or policyholder based on his credit information to provide notice to the applicant or policyholder in accordance with federal law that an adverse action has been taken and to provide notice to the applicant or policyholder explaining the reasons for the adverse action. (NRS 686A.710) This bill requires the notice explaining the reasons for the adverse action to be provided in a form approved by the commissioner of Insurance. |
| New Hamsphire | H.B. 253 Inexpedient to legislate 3/27/07 Makes it a discriminatory and unfair insurance trade practice to charge higher premiums for automobile and homeowner insurance based on credit rating. Current law allows the use of credit reports for such purposes if it is not the sole reason for higher premiums. |
| New Jersey | A.B. 787 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 “consumer 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. |
| A.B. 3521 S.B. 2327 Requires the Department of Banking and Insurance to conduct an investigation of practices of the automobile insurance industry in regard to increases in premiums for drivers who have had motor vehicle driver’s license suspensions for any reason – either driving related or not. Further, the commissioner is to investigate the use of credit ratings in determining premiums for drivers. In performing its investigation, the Department of Banking and Insurance is to determine whether increases are justified for offenses not related to driving or credit ratings. |
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| New York | A.B. 42 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. |
| A.B. 1039 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. |
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| A.B. 6822 Requires commercial lines insurers to provide notice to consumers when credit information is used in the rating or underwriting of such insurance. |
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| North Carolina | S.B. 1185 Prohibits the use of credit scoring as the sole or partial basis of terminating certain insurance policies or subjecting certain policies to consent to rate. |
| Pennsylvania | H.B. 94 Relates to the use of credit information by carriers of personal lines insurance. |
| H.B. 602 Provides for use of credit history of insureds; and further provides for penalties imposed by Insurance Department. |
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| H.B. 1410 Provides for use of credit score and credit report information as relates to automobile insurance. |
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| S.B. 168 Provides for use of credit history of insureds; and further provides for penalties imposed by Insurance Department. |
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| S.B. 517 Creates the Credit Scoring Prohibition Act. |
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| S.B. 518 Prohibits an insurer from canceling or refusing to issue or renew a policy of automobile insurance based on thecredit rating of a policyholder or applicant which the insurer deems to be unsatisfactory. An insurer is also prohibited from imposing a surcharge or applying a rating factor on a policy based on the use of a credit rating as an underwriting standard. |
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| Rhode Island | H.B. 5102 Prohibits the use of credit reports in connection with a consumer’s 2 application for insurance. |
| Tenneessee | H.B. 1492 S.B. 2044 Prohibits an insurer from taking an adverse action against a consumer based primarily on the consumer’s insurance score, credit reports, or other credit information or based primarily on the fact the consumer does not have a credit account. |
| H.B. 2058 S.B. 1989 Makes it an unfair insurance practice and a violation of the Consumer Protection Act for an insurance company to use an individual’s credit information to underwrite, cancel, or refuse a new risk or increase premiums on a policy. |
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| Texas | H.B. 981 Relates to the use of credit scoring in certain lines of personal insurance. |
| H.B. 1873 Relates to the use of credit scoring in certain lines of personal insurance and to the contents of consumer credit reports. |
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| H.B. 3331 Relates to the use of credit scoring in certain lines of personal insurance and to the contents of consumer credit reports. |
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| H.B. 3565 S.B. 533 Relates to the use of credit scoring in certain lines of personal insurance and to the contents of consumer credit reports. |
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| Vermont | H.B. 329 Requires insurers to notify applicants when the insurer takes an adverse action as a result of the applicant’s credit score. |
| Virginia | H.B. 2887 Stricken from docket 1/30/07 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. |
| West Virginia | H.B. 2034 S.B. 63 Relates to insurance generally; and prohibits the use of a credit score in casualty insurance rate filings. |
| H.B. 2167 Prohibits the use of a person’s credit history in insurance transactions. |
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| H.B. 2281 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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| H.B. 2880 Prohibits the number of inquiries reflected in a credit report, credit score report or CLUE report from adversely affecting an application for insurance; limits the use of a credit score to banking institution credit scoring for casualty insurance rate filings; and prohibits reliance on information which is false or potentially false; limits the use of a credit score in casualty insurance rate filings. |
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| H.B. 3061 Prohibits the use of credit scoring as a consideration in calculating insurance rates in homeowners or automobile liability policies. |
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| Wisconsin | A.B. 387 Prohibits an insurer from considering information in an individual’s credit report for purposes of issuing or renewing motor vehicle or property insurance, including renter’s and homeowner’s insurance, or setting premiums for motor vehicle or property insurance. The bill also prohibits a rating plan for motor vehicle or property insurance from using information in an individual’s credit report as a rating factor. |
| S.B. 259 Prohibits an insurer from considering information in an individual’s credit report for purposes of issuing or renewing motor vehicle or property insurance, including renter’s and homeowner’s insurance, or setting premiums for motor vehicle or property insurance. Prohibits a rating plan for motor vehicle or property insurance from using information in an individual’s credit report as a rating factor. |
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