Bill Text: FL S0414 | 2018 | Regular Session | Introduced
Bill Title: Use of Credit Information for Motor Vehicle Insurance
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2018-03-10 - Died in Banking and Insurance [S0414 Detail]
Download: Florida-2018-S0414-Introduced.html
Florida Senate - 2018 SB 414 By Senator Farmer 34-00130-18 2018414__ 1 A bill to be entitled 2 An act relating to the use of credit information for 3 motor vehicle insurance; amending s. 626.9741, F.S.; 4 revising the purpose of the section; prohibiting 5 insurers from requesting or using credit reports or 6 credit scores of applicants or insureds for 7 underwriting or rating purposes as to personal lines 8 motor vehicle insurance; prohibiting insurers from 9 making adverse decisions against such applicants or 10 insureds based on the applicants’ or insureds’ credit 11 reports or credit scores; conforming provisions to 12 changes made by the act; providing an effective date. 13 14 Be It Enacted by the Legislature of the State of Florida: 15 16 Section 1. Section 626.9741, Florida Statutes, is amended 17 to read: 18 626.9741 Use of credit reports and credit scores by 19 insurers.— 20 (1) PURPOSE AND APPLICABILITY.—The purpose of this section 21 is to prohibit the use of credit reports and credit scores by 22 insurers for underwriting and rating purposes as to personal 23 lines motor vehicle insurance and to regulate and limit the use 24 of credit reports and credit scores by insurers for underwriting 25 and rating purposes as to personal lines residential insurance. 26 This section applies only to personal lines motor vehicle 27 insurance and personal lines residential insurance, which 28 includes homeowners, mobile home owners’ dwelling, tenants, 29 condominium unit owners, cooperative unit owners, and similar 30 types of insurance. 31 (2) DEFINITIONS.—As used in this section, the term: 32 (a) “Adverse decision” means a decision to refuse to issue 33 or renew a policy of insurance; to issue a policy with 34 exclusions or restrictions; to increase the rates or premium 35 charged for a policy of insurance; to place an insured or 36 applicant in a rating tier that does not have the lowest 37 available rates for which that insured or applicant is otherwise 38 eligible; or to place an applicant or insured with a company 39 operating under common management, control, or ownership which 40 does not offer the lowest rates available, within the affiliate 41 group of insurance companies, for which that insured or 42 applicant is otherwise eligible. 43 (b) “Credit report” means any written, oral, or other 44 communication of any information by a consumer reporting agency, 45 as defined in the federal Fair Credit Reporting Act, 15 U.S.C. 46 ss. 1681 et seq., bearing on a consumer’s credit worthiness, 47 credit standing, or credit capacity, which is used or expected 48 to be used or collected as a factor to establish a person’s 49 eligibility for credit or insurance, or any other purpose 50 authorized pursuant to the applicable provision of such federal 51 act. A credit score alone, as calculated by a credit reporting 52 agency or by or for the insurer, may not be considered a credit 53 report. 54 (c) “Credit score” means a score, grade, or value that is 55 derived by using any or all data from a credit report in any 56 type of model, method, or program, whether electronically, in an 57 algorithm, computer software or program, or any other process, 58 for the purpose of grading or ranking credit report data. 59 (d) “Tier” means a category within a single insurer into 60 which insureds with substantially similar risk, exposure, or 61 expense factors are placed for purposes of determining rate or 62 premium. 63 (3) PERSONAL LINES MOTOR VEHICLE INSURANCE.—As to personal 64 lines motor vehicle insurance, an insurer may not request or use 65 a credit report or credit score of any applicant or insured for 66 underwriting or rating purposes or make an adverse decision 67 against an applicant or insured based, in whole or in part, on 68 his or her credit report or credit score. 69 (4)(3)PERSONAL LINES RESIDENTIAL INSURANCE.— 70 (a) As to personal lines residential insurance, an insurer 71 must inform an applicant or insured, in the same medium as the 72 application is taken, that a credit report or score is being 73 requested for underwriting or rating purposes. An insurer that 74 makes an adverse decision based, in whole or in part, upon a 75 credit report must provide at no charge, a copy of the credit 76 report to the applicant or insured or provide the applicant or 77 insured with the name, address, and telephone number of the 78 consumer reporting agency from which the insured or applicant 79 may obtain the credit report. The insurer must provide 80 notification to the consumer explaining the reasons for the 81 adverse decision. The reasons must be provided in sufficiently 82 clear and specific language so that a person can identify the 83 basis for the insurer’s adverse decision. Such notification 84 shall include a description of the four primary reasons, or such 85 fewer number as existed, which were the primary influences of 86 the adverse decision. The use of generalized terms such as “poor 87 credit history,” “poor credit rating,” or “poor insurance score” 88 does not meet the explanation requirements of this paragraph 89subsection. A credit score may not be used in underwriting or 90 rating insurance unless the scoring process produces information 91 in sufficient detail to permit compliance with the requirements 92 of this paragraphsubsection. It shall not be deemed an adverse 93 decision if, due to the insured’s credit report or credit score, 94 the insured continues to receive a less favorable rate or 95 placement in a less favorable tier or company at the time of 96 renewal except for renewals or reunderwriting required by this 97 subsectionsection. 98 (b)1.(4)(a)An insurer may not request a credit report or 99 score based upon the race, color, religion, marital status, age, 100 gender, income, national origin, or place of residence of the 101 applicant or insured. 102 2.(b)An insurer may not make an adverse decision solely 103 because of information contained in a credit report or score 104 without consideration of any other underwriting or rating 105 factor. 106 3.(c)An insurer may not make an adverse decision or use a 107 credit score that could lead to such a decision if based, in 108 whole or in part, on: 109 a.1.The absence of, or an insufficient, credit history, in 110 which instance the insurer shall: 111 (I)a.Treat the consumer as otherwise approved by the 112 Office of Insurance Regulation if the insurer presents 113 information that such an absence or inability is related to the 114 risk for the insurer; 115 (II)b.Treat the consumer as if the applicant or insured 116 had neutral credit information, as defined by the insurer; 117 (III)c.Exclude the use of credit information as a factor 118 and use only other underwriting criteria; 119 b.2.Collection accounts with a medical industry code, if 120 so identified on the consumer’s credit report; 121 c.3.Place of residence; or 122 d.4.Any other circumstance that the Financial Services 123 Commission determines, by rule, lacks sufficient statistical 124 correlation and actuarial justification as a predictor of 125 insurance risk. 126 4.(d)An insurer may use the number of credit inquiries 127 requested or made regarding the applicant or insured except for: 128 a.1.Credit inquiries not initiated by the consumer or 129 inquiries requested by the consumer for his or her own credit 130 information. 131 b.2.Inquiries relating to insurance coverage, if so 132 identified on a consumer’s credit report. 133 c.3.Collection accounts with a medical industry code, if 134 so identified on the consumer’s credit report. 135 d.4.Multiple lender inquiries, if coded by the consumer 136 reporting agency on the consumer’s credit report as being from 137 the home mortgage industry and made within 30 days of one 138 another, unless only one inquiry is considered. 139 e.5.Multiple lender inquiries, if coded by the consumer 140 reporting agency on the consumer’s credit report as being from 141 the automobile lending industry and made within 30 days of one 142 another, unless only one inquiry is considered. 143 5.(e)An insurer must, upon the request of an applicant or 144 insured, provide a means of appeal for an applicant or insured 145 whose credit report or credit score is unduly influenced by a 146 dissolution of marriage, the death of a spouse, or temporary 147 loss of employment. The insurer must complete its review within 148 10 business days after the request by the applicant or insured 149 and receipt of reasonable documentation requested by the 150 insurer, and, if the insurer determines that the credit report 151 or credit score was unduly influenced by any of such factors, 152 the insurer shall treat the applicant or insured as if the 153 applicant or insured had neutral credit information or shall 154 exclude the credit information, as defined by the insurer, 155 whichever is more favorable to the applicant or insured. An 156 insurer shall not be considered out of compliance with its 157 underwriting rules or rates or forms filed with the Office of 158 Insurance Regulation or out of compliance with any other state 159 law or rule as a result of granting any exceptions pursuant to 160 this paragraphsubsection. 161 (c)(5)A rate filing that uses credit reports or credit 162 scores must comply with the requirements of s. 627.062 or s. 163 627.0651 to ensure that rates are not excessive, inadequate, or 164 unfairly discriminatory. 165 (d)(6)An insurer that requests or uses credit reports and 166 credit scoring in its underwriting and rating methods shall 167 maintain and adhere to established written procedures that 168 reflect the restrictions set forth in the federal Fair Credit 169 Reporting Act, this subsectionsection, and all rules related 170 thereto. 171 (e)1.(7)(a)An insurer shall establish procedures to review 172 the credit history of an insured who was adversely affected by 173 the use of the insured’s credit history at the initial rating of 174 the policy, or at a subsequent renewal thereof. This review must 175 be performed at a minimum of once every 2 years or at the 176 request of the insured, whichever is sooner, and the insurer 177 shall adjust the premium of the insured to reflect any 178 improvement in the credit history. The procedures must provide 179 that, with respect to existing policyholders, the review of a 180 credit report will not be used by the insurer to cancel, refuse 181 to renew, or require a change in the method of payment or 182 payment plan. 183 2.(b)However, as an alternative to the requirements of 184 subparagraph 1.paragraph (a), an insurer that used a credit 185 report or credit score for an insured upon inception of a 186 policy, who will not use a credit report or score for 187 reunderwriting, shall reevaluate the insured within the first 3 188 years after inception, based on other allowable underwriting or 189 rating factors, excluding credit information if the insurer does 190 not increase the rates or premium charged to the insured based 191 on the exclusion of credit reports or credit scores. 192 (5)(8)RULES.—The commission may adopt rules to administer 193 this section. The rules may include, but need not be limited to: 194 (a) Information that must be included in filings to 195 demonstrate compliance with paragraph (4)(a)subsection (3). 196 (b) Statistical detail that insurers using credit reports 197 or scores under paragraph (4)(c)subsection (5)must retain and 198 report annually to the Office of Insurance Regulation. 199 (c) Standards that ensure that rates or premiums associated 200 with the use of a credit report or score are not unfairly 201 discriminatory, based upon race, color, religion, marital 202 status, age, gender, income, national origin, or place of 203 residence. 204 (d) Standards for review of models, methods, programs, or 205 any other process by which to grade or rank credit report data 206 and which may produce credit scores in order to ensure that the 207 insurer demonstrates that such grading, ranking, or scoring is 208 valid in predicting insurance risk of an applicant or insured. 209 Section 2. This act shall take effect July 1, 2018.