Bill Text: IL HB0418 | 2009-2010 | 96th General Assembly | Enrolled

---

Bill Title: 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. Effective immediately.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Passed) 2009-08-18 - Public Act . . . . . . . . . 96-0560 [HB0418 Detail]

Download: Illinois-2009-HB0418-Enrolled.html

---

HB0418 Enrolled LRB096 07541 MJR 17636 b
AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Use of Credit Information in Personal
Insurance Act is amended by changing Section 20 as follows:
(215 ILCS 157/20)
Sec. 20. Use of credit information.
(a) An insurer authorized to do business in this State that
uses credit information to underwrite or rate risks shall not:
(1) Use an insurance score that is calculated using
income, gender, address, ethnic group, religion, marital
status, or nationality of the consumer as a factor.
(2) Deny, cancel, or nonrenew a policy of personal
insurance solely on the basis of credit information,
without consideration of any other applicable underwriting
factor independent of credit information and not expressly
prohibited by item (1). An insurer shall not be considered
to have denied, cancelled, or nonrenewed a policy if
coverage is available through an affiliate. 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 a notice as described in Section 35 of
this Act and an opportunity for the affected party to

HB0418 Enrolled - 2 - LRB096 07541 MJR 17636 b
explain its credit information under the procedures
outlined in Section 22 of this Act.
(3) Base an insured's renewal rates for personal
insurance solely upon credit information, without
consideration of any other applicable factor independent
of credit information. An insurer shall not be considered
to have based rates solely on credit information if
coverage is available in a different tier of the same
insurer.
(4) Take an adverse action against a consumer solely
because he or she does not have a credit card account,
without consideration of any other applicable factor
independent of credit information.
(5) Consider an absence of credit information or an
inability to calculate an insurance score in underwriting
or rating personal insurance, unless the insurer does one
of the following:
(A) Treats the consumer as otherwise filed with the
Department, if the insurer presents information that
such an absence or inability relates to the risk for
the insurer and submits a filing certification form
signed by an officer for the insurer certifying that
such treatment is actuarially justified.
(B) Treats the consumer as if the applicant or
insured had neutral credit information, as defined by
the insurer.

HB0418 Enrolled - 3 - LRB096 07541 MJR 17636 b
(C) Excludes the use of credit information as a
factor and uses only other underwriting criteria.
(6) Take an adverse action against a consumer based on
credit information, unless an insurer obtains and uses a
credit report issued or an insurance score calculated
within 90 days from the date the policy is first written or
renewal is issued.
(7) (Blank). Use credit information unless not later
than every 36 months following the last time that the
insurer obtained current credit information for the
insured, the insurer recalculates the insurance score or
obtains an updated credit report. Regardless of the other
requirements of this Section:
(A) At annual renewal, upon the request of a
consumer or the consumer's agent, the insurer shall
re-underwrite and re-rate the policy based upon a
current credit report or insurance score. An insurer
need not recalculate the insurance score or obtain the
updated credit report of a consumer more frequently
than once in a 12-month period.
(B) The insurer shall have the discretion to obtain
current credit information upon any renewal before the
expiration of 36 months, if consistent with its
underwriting guidelines.
(C) An insurer is not required to obtain current
credit information for an insured, despite the

HB0418 Enrolled - 4 - LRB096 07541 MJR 17636 b
requirements of subitem (A) of item (7) of this Section
if one of the following applies:
(a) The insurer is treating the consumer as
otherwise filed with the Department.
(b) The insured is in the most
favorably-priced tier of the insurer, within a
group of affiliated insurers. However, the insurer
shall have the discretion to order credit
information, if consistent with its underwriting
guidelines.
(c) Credit was not used for underwriting or
rating the insured when the policy was initially
written. However, the insurer shall have the
discretion to use credit for underwriting or
rating the insured upon renewal, if consistent
with its underwriting guidelines.
(d) The insurer re-evaluates the insured
beginning no later than 36 months after inception
and thereafter based upon other underwriting or
rating factors, excluding credit information.
(8) Use the following as a negative factor in any
insurance scoring methodology or in reviewing credit
information for the purpose of underwriting or rating a
policy of personal insurance:
(A) Credit inquiries not initiated by the consumer
or inquiries requested by the consumer for his or her

HB0418 Enrolled - 5 - LRB096 07541 MJR 17636 b
own credit information.
(B) Inquiries relating to insurance coverage, if
so identified on a consumer's credit report.
(C) Collection accounts with a medical industry
code, if so identified on the consumer's credit report.
(D) Multiple lender inquiries, if coded by the
consumer reporting agency on the consumer's credit
report as being from the home mortgage industry and
made within 30 days of one another, unless only one
inquiry is considered.
(E) Multiple lender inquiries, if coded by the
consumer reporting agency on the consumer's credit
report as being from the automobile lending industry
and made within 30 days of one another, unless only one
inquiry is considered.
(b) An insurer authorized to do business in this State that
uses credit information to underwrite or rate risks shall, at
annual renewal upon the request of an insured or an insured's
agent, re-underwrite and re-rate the insured's personal
insurance policy based on a current credit report or insurance
score unless one of the following applies:
(1) The insurer's treatment of the consumer is
otherwise approved by the Department.
(2) The insured is in the most favorably priced tier of
the insurer, within a group of affiliated insurers.
(3) Credit information was not used for underwriting or

HB0418 Enrolled - 6 - LRB096 07541 MJR 17636 b
rating the insured when the personal insurance policy was
initially written.
(4) The insurer reevaluates the insured at least every
36 months after a personal insurance policy is issued based
on underwriting or rating factors other than credit
information.
(5) The insurer has recalculated an insurance score or
obtained an updated credit report of a consumer in the
previous 12-month period.
An insurer that uses credit information to underwrite or rate
risks may obtain current credit information upon the renewal of
a personal insurance policy when renewal occurs more frequently
than every 36 months if consistent with the insurer's
underwriting guidelines.
(Source: P.A. 93-114, eff. 10-1-03; 93-477, eff. 10-1-03.)
Section 10. The Public Utilities Act is amended by adding
Section 8-101.5 as follows:
(220 ILCS 5/8-101.5 new)
Sec. 8-101.5. Use of credit information of prospective and
existing customers. A public utility may not deny, cancel, or
nonrenew utility service solely on the basis of credit
information of prospective or existing customers. If a public
utility denies, cancels, or does not renew service based on
credit information, it must provide the affected party with an

HB0418 Enrolled - 7 - LRB096 07541 MJR 17636 b
explanation for the public utility's action and an opportunity
for the affected party to explain its credit information. This
Section does not apply to a telecommunications carrier or any
of its affiliates.
Section 99. Effective date. This Act takes effect upon