Bill Text: MI HB4127 | 2015-2016 | 98th Legislature | Introduced

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Bill Title: Insurance; unfair trade practices; use of credit score to determine insurance premium; prohibit. Amends secs. 2151 & 2153 of 1956 PA 218 (MCL 500.2151 & 500.2153) & repeals secs. 2154 - 2161 of 1956 PA 218 (MCL 500.2154 - 500.2161).

Spectrum: Partisan Bill (Democrat 21-0)

Status: (Introduced - Dead) 2015-02-04 - Printed Bill Filed 02/04/2015 [HB4127 Detail]

Download: Michigan-2015-HB4127-Introduced.html

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HOUSE BILL No. 4127

 

February 3, 2015, Introduced by Reps. Gay-Dagnogo, Sarah Roberts, Banks, Byrd, Yanez, Singh, Hovey-Wright, Robinson, Wittenberg, Derek Miller, Lane, Love, Garrett, Talabi, Smiley, Rutledge, Neeley, Phelps, Durhal, Faris and Cochran and referred to the Committee on Insurance.

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending sections 2151 and 2153 (MCL 500.2151 and 500.2153),

 

section 2151 as added by 2012 PA 165 and section 2153 as added by

 

2012 PA 206; and to repeal acts and parts of acts.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 2151. As used in this chapter:

 

     (a) "Adverse action" means an increase in any charge for, or a

 

reduction or other adverse or unfavorable change in the terms of

 

coverage or amount of, any personal insurance, existing or applied

 

for.

 

     (a) (b) "Consumer reporting agency" means any a person which,

 

that, for monetary fees or dues or on a cooperative nonprofit

 

basis, regularly engages in whole or in part in the practice of

 

assembling or evaluating consumer credit information or other

 

information on consumers for the purpose of furnishing consumer

 

reports to third parties.

 

     (b) (c) "Credit information" means any credit-related

 

information derived from a credit report, found on a credit report

 

itself, or provided on an application for personal insurance.

 

Information that is not credit-related shall is not be considered

 

credit information, regardless of whether it is contained in a

 

credit report or in an application, or is used to calculate an

 

insurance score.

 

     (c) (d) "Credit report" means any written, oral, or other

 

communication of information by a consumer reporting agency bearing

 

on a consumer's credit worthiness, credit standing, or credit

 

capacity that is used or expected to be used or collected in whole

 

or in part for the purpose of serving as a factor in the rating of

 

personal insurance.

 

     (d) (e) "Insurance score" means a number or rating that is

 

derived from an algorithm, computer application, model, or other

 

process that is based in whole or in part on credit information for

 

the purposes of predicting the future insurance loss exposure of an

 

individual applicant or insured.

 

     (e) (f) "Personal insurance" means property/casualty insurance

 

written for personal, family, or household use, including

 

automobile, home, motorcycle, mobile home, noncommercial dwelling

 

fire, boat, personal watercraft, snowmobile, and recreational

 

vehicle, whether written on an individual, group, franchise,

 

blanket policy, or similar basis.

 

     Sec. 2153. An insurer shall not use credit information or an

 

insurance score as any part of a decision to deny, cancel, or

 

nonrenew a personal insurance policy under chapters 21, 24, and 26.

 

However, An insurer shall not use credit information and or an

 

insurance score may be used to determine premium installment

 

payment options and availability. An insurer shall not apply credit

 

information or a credit-based insurance score that is otherwise

 

permitted under this act unless all of the following are met:

 

     (a) The insurer or its producer discloses, either on the

 

insurance application or at the time the application is taken, that

 

it may obtain credit information in connection with the

 

application. This disclosure shall be either written or provided to

 

an applicant in the same medium as the application for insurance.

 

An insurer may use the following disclosure statement:

 

     "In connection with this application for insurance, we may

 

review your credit report or obtain or use a credit-based insurance

 

score based on the information contained in that credit report. We

 

may use a third party in connection with the development of your

 

insurance score.".

 

     (b) The insurer or a third party on behalf of the insurer does

 

not use income, gender, address, zip code, ethnic group, religion,

 

marital status, or nationality of the insured or insurance

 

applicant in calculating an insurance score.

 

     (c) The insurer does not take an adverse action against a

 

consumer because he or she does not have a credit card account.

 

However, an insurer may take an adverse action against that insured

 

if it is based on any other applicable factor that is independent

 

of the fact that the consumer does not have a credit card account.

 

     (d) The insurer or a third party on behalf of the insurer does

 

not consider an absence of credit information or an inability to

 

calculate an insurance score in the rating of personal insurance

 

unless any resulting rate differential is filed with and not

 

disapproved by the office of financial and insurance regulation.

 

The office of financial and insurance regulation shall not

 

disapprove a filing under this subdivision if it meets 1 of the

 

following:

 

     (i) Is reasonably justified by differences in losses, expenses,

 

or both.

 

     (ii) Provides the insured or insurance applicant with a

 

discount that is not less, on average, than the average credit

 

based discount received by the insurer's insureds in this state.

 

     (e) The insurer or a third party on the insurer's behalf uses

 

a credit report issued within 90 days before the date an insurance

 

score based on that credit report is first applied to the insured.

 

     (f) Upon the insured's request or with the insured's

 

permission the insured's producer's request at annual renewal, or

 

upon the insured's request during the course of the policy, an

 

insurer or a third party on the insurer's behalf shall obtain a new

 

credit report or insurance score and rerate the insured. An insurer

 

or a third party on the insurer's behalf is not required to obtain

 

a new credit report or recalculate the insurance score more

 

frequently than once in a 12-month period. An insurer or a third

 

party on the insurer's behalf may order a credit report upon any

 

renewal if the insurer does so using a consistent methodology with

 

all its insureds.

 

     (g) For insurance scores calculated or recalculated on or

 

after the effective date of the amendatory act that added this

 

section, the insurer or a third party on the insurer's behalf does

 

not use the following as a negative factor in any insurance score

 

or in reviewing credit information:

 

     (i) Credit inquiries not initiated by the consumer or requested

 

by the consumer for his or her own credit information.

 

     (ii) Credit inquiries relating to insurance coverage, if so

 

identified on an insured's or insurance applicant's credit report.

 

     (iii) Multiple lender inquiries, if coded by the consumer

 

reporting agency on the credit report as being from the home

 

mortgage industry and made within 30 days of one another, unless

 

only 1 inquiry is considered.

 

     (iv) Multiple lender inquiries, if coded by the consumer

 

reporting agency on the credit report as being from the automobile

 

lending industry and made within 30 days of one another, unless

 

only 1 inquiry is considered.

 

     (v) Collection accounts with a medical industry code, if so

 

identified on the consumer's credit report.

 

     Enacting section 1. Sections 2154 to 2161 of the insurance

 

code of 1956, 1956 PA 218, MCL 500.2154 to 500.2161, are repealed.