Senate Bill sb0204
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 2003 SB 204
By Senator Miller
18-242-03
1 A bill to be entitled
2 An act relating to the use of credit reports by
3 insurers; creating s. 626.9741, F.S.;
4 specifying that the act's purpose is to
5 regulate and limit the use of credit reports by
6 insurers for underwriting and rating purposes;
7 specifying the types of insurance to which the
8 section applies; defining terms; requiring
9 insurers to notify applicants and insureds of
10 the use of credit reports and to provide a copy
11 of the credit report; prohibiting insurers from
12 making adverse underwriting decisions based on
13 certain credit information or under certain
14 circumstances; authorizing the Financial
15 Services Commission to adopt rules; requiring
16 the Office of Insurance Regulation to approve
17 an insurer's methodology for using credit
18 reports and to conduct a study of the use of
19 credit reports for underwriting and rating
20 purposes; providing for application; providing
21 an effective date.
22
23 Be It Enacted by the Legislature of the State of Florida:
24
25 Section 1. Section 626.9741, Florida Statutes, is
26 created to read:
27 626.9741 Use of credit reports by insurers.--
28 (1) The purpose of this section is to regulate and
29 limit the use of credit reports by insurers for underwriting
30 and rating purposes. This section applies only to personal
31 lines motor vehicle insurance and homeowner's insurance.
1
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 2003 SB 204
18-242-03
1 (2) As used in this section, the term:
2 (a) "Adverse underwriting decision" means a decision
3 to deny or nonrenew a policy of insurance, to issue a policy
4 with exclusions or restrictions, or to increase the rates or
5 premium charged for the policy of insurance.
6 (b) "Credit report" means any written, oral, or other
7 communication of any information by a consumer reporting
8 agency, as defined in the Federal Fair Credit Reporting Act,
9 15 U.S.C. ss.1681, et seq., bearing on a consumer's credit
10 worthiness, credit standing, or credit capacity, which is used
11 or expected to be used or collected as a factor to establish a
12 person's eligibility for credit or insurance or any other
13 purpose authorized pursuant to the applicable provision of the
14 Federal Fair Credit Reporting Act.
15 (3) An insurer must notify the applicant or insured,
16 in writing, prior to requesting a credit report, that a credit
17 report is being requested and may be used for underwriting or
18 rating purposes. An insurer that makes an adverse underwriting
19 decision based upon a credit report must provide, or designate
20 a third party to provide, a copy of the credit report to the
21 applicant or insured and must identify the specific items in
22 the credit report which resulted in the adverse underwriting
23 decision.
24 (4)(a) An insurer may not make an adverse underwriting
25 decision solely because of credit information contained in a
26 credit report.
27 (b) An insurer may not make an adverse underwriting
28 decision based on:
29 1. The absence of, or an insufficient, credit history;
30 2. The number of credit reports or credit inquiries
31 requested or made regarding the applicant or insured;
2
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 2003 SB 204
18-242-03
1 3. Credit problems resulting from medical bills; or
2 4. Any other special circumstance that the Financial
3 Services Commission determines, by rule, does not pose an
4 increased insurance risk.
5 (c) An insurer may not request a credit report based
6 upon the race, color, creed, marital status, gender, or
7 national origin of the applicant or insured.
8 (5) An insurer may not use a credit report as an
9 underwriting or rating factor unless the insurer provides the
10 Office of Insurance Regulation sufficient information for the
11 office to determine that the methodology used by the insurer
12 reasonably predicts the insurance risk posed by the applicant
13 or insured and that the weight given to the credit information
14 is reasonable compared to other factors affecting insurance
15 risk. Any premium increase imposed by an insurer based on
16 credit information contained in a credit report must be
17 consistent with the rates filed with and approved by the
18 Office of Insurance Regulation pursuant to the applicable
19 insurance rating laws and rules.
20 (6) An insurer may not refuse to renew a policy or
21 impose a premium increase due to credit information contained
22 in a credit report until the insured has had an opportunity to
23 correct any errors in the credit report, as provided in this
24 subsection. The insurer must notify the insured that he or she
25 may correct or question the accuracy of the information on
26 which the nonrenewal or premium increase is based within 10
27 days after receiving a copy of the credit report required to
28 be provided by subsection (3). If, within such period, the
29 insured notifies the insurer or a third party designated by
30 the insurer, in writing, that the insured questions the
31 accuracy of the credit information on which the nonrenewal or
3
CODING: Words stricken are deletions; words underlined are additions.
Florida Senate - 2003 SB 204
18-242-03
1 premium increase was based, the nonrenewal or premium increase
2 may not take effect until 30 days after the accuracy of the
3 credit information has been verified and communicated to the
4 insured. An insured must cooperate in any such investigation.
5 The insurer may nonrenew the policy or impose the premium
6 increase if the insured fails to respond to relevant questions
7 regarding the investigation within 15 days after written
8 notice to the insured.
9 (7) The Financial Services Commission may adopt rules
10 to administer this section.
11 Section 2. The Office of Insurance Regulation shall
12 conduct a study of the use of credit information as an
13 underwriting and rating factor. The study shall evaluate and
14 determine the increased risk of insurance loss posed by an
15 individual's credit worthiness, credit standing, or credit
16 capacity, and the appropriate weight that should be given to
17 such factors in determining insurability in conjunction with
18 other risk factors.
19 Section 3. This act shall take effect January 1, 2004,
20 and applies to policies issued or renewed on or after that
21 date.
22
23 *****************************************
24 SENATE SUMMARY
25 Requires that an insurer notify an applicant or insured
of the use of a credit report to establish the person's
26 eligibility for credit or insurance. Prohibits the use of
specified credit information to make an adverse
27 underwriting decision. Requires that an insured be given
an opportunity to correct or question any errors in a
28 credit report. Requires that the Office of Insurance
Regulation approve an insurer's methodology for using
29 credit reports. Authorizes the Financial Services
Commission to adopt rules. (See bill for details.)
30
31
4
CODING: Words stricken are deletions; words underlined are additions.