HB 0233 2003
1	A bill to be entitled
2	An act relating to use of consumer credit information in
3	personal insurance underwriting; providing a popular
4	reference name; providing a purpose; providing
5	application; providing definitions; specifying prohibited
6	activities for insurers using credit information for
7	certain purposes; requiring insurers to reunderwrite or
8	rerate consumers under certain circumstances; requiring a
9	refund under certain circumstances; requiring insurers to
10	disclose certain credit information acquisition activities
11	under certain circumstances and to secure authorization
12	for such activities; requiring insurers to provide certain
13	notice of adverse actions; providing criteria; requiring
14	insurers to file certain scoring models or processes with
15	the Office of Insurance Regulation of the Financial
16	Services Commission; requiring insurers to indemnify,
17	defend, and hold harmless certain agents from liability,
18	fees, and costs under certain circumstances; prohibiting
19	consumer reporting agencies from providing or selling
20	certain lists or data relating to certain consumer credit
21	information; providing an exception; providing
22	severability; requiring the Office of Insurance Regulation
23	of the Financial Services Commission to conduct a study of
24	the use of credit information for underwriting and rating
25	purposes; providing study criteria; providing an effective
26	date.
27
28	Be It Enacted by the Legislature of the State of Florida:
29
30	Section 1.(1) This section may be popularly referred to
31	as the “Use of Credit Information in Personal Insurance Act.”
32	(2) The purpose of this section is to regulate the use of
33	credit information for personal insurance to protect consumers
34	with respect to the use of such information.
35	(3) This section applies to personal insurance only. For
36	purposes of this section, “personal insurance” means private
37	passenger automobile, homeowners’, motorcycle, mobile-
38	homeowners’, and noncommercial dwelling fire insurance policies
39	and boat, personal watercraft, snowmobile, and recreational
40	vehicle insurance policies. Such policies must be individually
41	underwritten for personal, family, or household use. No other
42	type of insurance shall be included as personal insurance for
43	purposes of this section.
44	(4) For purposes of this section:
45	(a) “Adverse action” means a denial or cancellation of, an
46	increase in any charge for, or a reduction or other adverse or
47	unfavorable change in the terms of coverage or amount of, any
48	insurance, existing or applied for, in connection with the
49	underwriting of personal insurance.
50	(b) “Affiliate” means any company that controls, is
51	controlled by, or is under common control with another company.
52	(c) “Applicant” means an individual who has applied for
53	coverage under a personal insurance policy with an insurer.
54	(d) “Consumer” means an insured whose credit information
55	is used or whose insurance score is calculated in the
56	underwriting or rating of a personal insurance policy or an
57	applicant for such a policy.
58	(e) “Consumer reporting agency” means any entity which,
59	for monetary fees or dues, or on a cooperative nonprofit basis,
60	regularly engages in whole or in part in the practice of
61	assembling or evaluating consumer credit information or other
62	information on consumers for the purpose of furnishing consumer
63	reports to third parties.
64	(f) “Credit information” means any credit-related
65	information derived from a credit report, found on a credit
66	report itself, or provided on an application for personal
67	insurance. Information that is not credit-related shall not be
68	considered credit information, regardless of whether it is
69	contained in a credit report or in an application or is used to
70	calculate an insurance score.
71	(g) “Credit report” means any written, oral, or other
72	communication of information by a consumer reporting agency
73	bearing on a consumer’s credit worthiness, credit standing, or
74	credit capacity which is used or expected to be used or
75	collected in whole or in part for the purpose of serving as a
76	factor to determine personal insurance premiums, eligibility for
77	coverage, or tier placement.
78	(h) “Insurance score” means a number or rating that is
79	derived from an algorithm, computer application, model, or other
80	process that is based in whole or in part on credit information
81	for the purposes of predicting the future insurance loss
82	exposure of an individual applicant or insured.
83	(5) An insurer authorized to do business in this state
84	that uses credit information to underwrite or rate risks shall
85	not:
86	(a) Use an insurance score that is calculated using
87	income, gender, address, zip code, ethnic group, religion,
88	marital status, or nationality of the consumer as a factor.
89	(b) Deny, cancel, or nonrenew a policy of personal
90	insurance solely on the basis of credit information without
91	consideration of any other applicable factor independent of
92	credit information and not expressly prohibited by paragraph
93	(a).
94	(c) Base an insured’s renewal rates for personal insurance
95	solely upon credit information without consideration of any
96	other applicable factor independent of credit information.
97	(d) Take an adverse action against a consumer solely
98	because he or she does not have a credit card account without
99	consideration of any other applicable factor independent of
100	credit information.
101	(e) Consider an absence of credit information or an
102	inability to calculate an insurance score in underwriting or
103	rating personal insurance, unless the insurer:
104	1. Treats the consumer as otherwise approved by the Chief
105	Financial Officer, if the insurer presents information that such
106	an absence or inability relates to the risk for the insurer;
107	2. Treats the consumer as if the applicant or insured had
108	neutral credit information, as defined by the insurer; or
109	3. Excludes the use of credit information as a factor and
110	uses only other underwriting criteria.
111	(f) Take an adverse action against a consumer based upon
112	credit information unless an insurer obtains and uses a credit
113	report issued or an insurance score calculated within 90 days
114	after the date the policy is first written or renewal is issued.
115	(g) Use credit information unless, not later than every 36
116	months following the last time that the insurer obtained current
117	credit information for the insured, the insurer recalculates the
118	insurance score or obtains an updated credit report. Regardless
119	of the requirements of this paragraph:
120	1. At annual renewal, upon the request of a consumer or
121	the consumer's agent, the insurer shall reunderwrite and rerate
122	the policy based upon a current credit report or insurance
123	score. An insurer need not recalculate the insurance score or
124	obtain the updated credit report of a consumer more frequently
125	than once in a 12-month period.
126	2. The insurer has the discretion to obtain current credit
127	information upon any renewal before the 36-month period, if
128	consistent with the insurer’s underwriting guidelines.
129	3. No insurer need obtain current credit information for
130	an insured, despite the requirements of subparagraph 1., if:
131	a. The insurer is treating the consumer as otherwise
132	approved by the Chief Financial Officer;
133	b. The insured is in the most favorably priced tier of the
134	insurer, within a group of affiliated insurers. However, the
135	insurer shall have the discretion to order such report if
136	consistent with its underwriting guidelines;
137	c. Credit was not used for underwriting or rating such
138	insured when the policy was initially written. However, the
139	insurer has the discretion to use credit for underwriting or
140	rating such insured upon renewal if consistent with its
141	underwriting guidelines; or
142	d. The insurer reevaluates the insured beginning no later
143	than 36 months after inception and thereafter based upon other
144	underwriting or rating factors, excluding credit information.
145	(h) Use the following as a negative factor in any
146	insurance scoring methodology or in reviewing credit information
147	for the purpose of underwriting or rating a policy of personal
148	insurance:
149	1. Credit inquiries not initiated by the consumer or
150	inquiries requested by the consumer for his or her own credit
151	information.
152	2. Inquiries relating to insurance coverage, if so
153	identified on a consumer’s credit report.
154	3. Collection accounts with a medical industry code, if so
155	identified on the consumer’s credit report.
156	4. Multiple lender inquiries, if coded by the consumer
157	reporting agency on the consumer’s credit report as being from
158	the home mortgage industry and made within 30 days of one
159	another, unless only one inquiry is considered.
160	5. Multiple lender inquiries, if coded by the consumer
161	reporting agency on the consumer's credit report as being from
162	the automobile lending industry and made within 30 days of one
163	another, unless only one inquiry is considered.
164	(i) Use a credit report as an underwriting or rating
165	factor unless the insurer can provide evidence that the methods
166	used to develop and implement the use of credit reports are
167	valid in predicting insurance risk.
168	(6) If it is determined through the dispute resolution
169	process set forth in the federal Fair Credit Reporting Act, 15
170	U.S.C. s. 1681i(a)(5), that the credit information of a current
171	insured was incorrect or incomplete and if the insurer receives
172	notice of such determination from the consumer reporting agency
173	or the insured, the insurer shall reunderwrite and rerate the
174	consumer within 30 days after receiving the notice. After
175	reunderwriting or rerating the insured, the insurer shall make
176	any adjustments necessary consistent with its underwriting and
177	rating guidelines. If an insurer determines that the insured has
178	overpaid premium, the insurer shall refund to the insured the
179	amount of overpayment calculated back to the shorter of the last
180	12 months of coverage or the actual policy period.
181	(7) If an insurer writing personal insurance uses credit
182	information in underwriting or rating an applicant or consumer:
183	(a) The insurer or its agent shall disclose, on the
184	insurance application or at the time the insurance application
185	is taken, that the insurer may obtain credit information in
186	connection with such application. Such disclosure shall be
187	either written or provided to an applicant in the same medium as
188	the application for insurance. The insurer need not provide the
189	disclosure statement required under this paragraph to any
190	insured on a renewal policy if such consumer has previously been
191	provided a disclosure statement. Use of the following example
192	disclosure statement constitutes compliance with this paragraph:
193
194	“In connection with this application for insurance, we
195	may review your credit report or obtain or use a
196	credit-based insurance score based on the information
197	contained in that credit report. We may use a third
198	party in connection with the development of your
199	insurance score.”
200
201	(b) The insurer shall secure authorization from each
202	applicant or consumer whose credit will be checked. If
203	permission or authorization is not granted, the absent credit
204	report shall be treated with neutrality and the applicant or
205	consumer shall not be penalized.
206	(8) If an insurer takes an adverse action based upon
207	credit information, the insurer shall:
208	(a) Provide notification to the consumer that an adverse
209	action has been taken, in accordance with the requirements of
210	the federal Fair Credit Reporting Act, 15 U.S.C. s. 1681m(a).
211	(b) Provide notification to the consumer explaining the
212	reasons for the adverse action. The reasons shall be provided
213	in sufficiently clear and specific language so that a person can
214	identify the basis for the insurer’s decision to take an adverse
215	action. The insurer shall identify the specific items in the
216	credit information which resulted in the adverse action. Such
217	items must be described such that the applicant or consumer can
218	identify and correct any errors included in the credit
219	information that contributed to the adverse action. The use of
220	generalized terms, including, but not limited to, “poor credit
221	history,” “poor credit rating,” or “poor insurance score,” does
222	not meet the explanation requirements of this paragraph.
223
224	Standardized credit explanations provided by consumer reporting
225	agencies or other third-party vendors are deemed to comply with
226	this subsection.
227	(9) An insurer that uses insurance scores to underwrite
228	and rate risks shall file its scoring models or other scoring
229	processes with the Office of Insurance Regulation of the
230	Financial Services Commission. A third party may file scoring
231	models on behalf of an insurer. A filing that includes
232	insurance scoring may include loss experience justifying the use
233	of credit information. Any filing relating to credit information
234	is considered a trade secret under s. 688.002 or s. 812.081,
235	Florida Statutes.
236	(10) An insurer shall indemnify, defend, and hold agents
237	harmless from and against all liability, fees, and costs arising
238	out of or relating to the actions, errors, or omissions of an
239	agent or a producer who obtains or uses credit information or
240	insurance scores for an insurer, provided the agent or producer
241	follows the instructions of or procedures established by the
242	insurer and complies with any applicable law or regulation.
243	Nothing in this subsection shall be construed to provide a
244	consumer or other insured with a cause of action that does not
245	exist in the absence of this subsection.
246	(11)(a) No consumer reporting agency shall provide or sell
247	data or lists that include any information that in whole or in
248	part was submitted in conjunction with an insurance inquiry
249	about a consumer’s credit information or a request for a credit
250	report or insurance score. Such information includes, but is
251	not limited to, the expiration dates of an insurance policy or
252	any other information that may identify time periods during
253	which a consumer’s insurance may expire and the terms and
254	conditions of the consumer’s insurance coverage.
255	(b) The restrictions provided in paragraph (a) do not
256	apply to data or lists the consumer reporting agency supplies to
257	the insurance agent or producer from whom information was
258	received, the insurer on whose behalf such agent or producer
259	acted, or such insurer’s affiliates or holding companies.
260	(c) Nothing in this subsection shall be construed to
261	restrict any insurer from obtaining a claims history report or a
262	motor vehicle report.
263	(12) If any provision of this section or the application
264	thereof to any person or circumstance is held invalid, the
265	invalidity shall not affect other provisions or applications of
266	the section which can be given effect without the invalid
267	provision or application, and to this end the provisions of this
268	section are declared severable.
269	Section 2.The Office of Insurance Regulation of the
270	Financial Services Commission shall conduct a study of the use
271	of credit information as an underwriting and rating factor. The
272	study shall evaluate and determine the increased risk of
273	insurance loss posed by an individual's credit worthiness,
274	credit standing, or credit capacity and the appropriate weight
275	that should be given to such factors in determining insurability
276	in conjunction with other risk factors.
277	Section 3. This act shall take effect October 1, 2003, and
278	shall apply to personal insurance policies written to be
279	effective or renewed on or after July 1, 2004.
280