HB 0133A 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
11	activities under certain circumstances and to secure
12	authorization for such activities; requiring insurers to
13	provide certain notice of adverse actions; providing
14	criteria; requiring insurers to file certain scoring
15	models or processes with the Office of Insurance
16	Regulation of the Financial Services Commission;
17	requiring insurers to indemnify, defend, and hold
18	harmless certain agents from liability, fees, and costs
19	under certain circumstances; prohibiting consumer
20	reporting agencies from providing or selling certain
21	lists or data relating to certain consumer credit
22	information; providing an exception; providing
23	severability; requiring the Office of Insurance
24	Regulation of the Financial Services Commission to
25	conduct a study of the use of credit information for
26	underwriting and rating purposes; providing study
27	criteria; providing for construction of the act in pari
28	materia with laws enacted during the 2003 Regular Session
29	of the Legislature; providing an effective date.
30
31	Be It Enacted by the Legislature of the State of Florida:
32
33	Section 1. (1) This section may be popularly referred to
34	as the “Use of Credit Information in Personal Insurance Act.”
35	(2) The purpose of this section is to regulate the use of
36	credit information for personal insurance to protect consumers
37	with respect to the use of such information.
38	(3) This section applies to personal insurance only. For
39	purposes of this section, “personal insurance” means private
40	passenger automobile, homeowners’, motorcycle, mobile-
41	homeowners’, and noncommercial dwelling fire insurance policies
42	and boat, personal watercraft, snowmobile, and recreational
43	vehicle insurance policies. Such policies must be individually
44	underwritten for personal, family, or household use. No other
45	type of insurance shall be included as personal insurance for
46	purposes of this section.
47	(4) For purposes of this section:
48	(a) “Adverse action” means a denial or cancellation of, an
49	increase in any charge for, or a reduction or other adverse or
50	unfavorable change in the terms of coverage or amount of any
51	insurance, existing or applied for, in connection with the
52	underwriting of personal insurance.
53	(b) “Affiliate” means any company that controls, is
54	controlled by, or is under common control with another company.
55	(c) “Applicant” means an individual who has applied for
56	coverage under a personal insurance policy with an insurer.
57	(d) “Consumer” means an insured whose credit information
58	is used or whose insurance score is calculated in the
59	underwriting or rating of a personal insurance policy or an
60	applicant for such a policy.
61	(e) “Consumer reporting agency” means any entity which,
62	for monetary fees or dues, or on a cooperative nonprofit basis,
63	regularly engages in whole or in part in the practice of
64	assembling or evaluating consumer credit information or other
65	information on consumers for the purpose of furnishing consumer
66	reports to third parties.
67	(f) “Credit information” means any credit-related
68	information derived from a credit report, found on a credit
69	report itself, or provided on an application for personal
70	insurance. Information that is not credit-related shall not be
71	considered credit information, regardless of whether it is
72	contained in a credit report or in an application or is used to
73	calculate an insurance score.
74	(g) “Credit report” means any written, oral, or other
75	communication of information by a consumer reporting agency
76	bearing on a consumer’s credit worthiness, credit standing, or
77	credit capacity which is used or expected to be used or
78	collected in whole or in part for the purpose of serving as a
79	factor to determine personal insurance premiums, eligibility for
80	coverage, or tier placement.
81	(h) “Insurance score” means a number or rating that is
82	derived from an algorithm, computer application, model, or other
83	process that is based in whole or in part on credit information
84	for the purpose of predicting the future insurance loss exposure
85	of an individual applicant or insured.
86	(5) An insurer authorized to do business in this state
87	that uses credit information to underwrite or rate risks shall
88	not:
89	(a) Use an insurance score that is calculated using
90	income, gender, address, zip code, ethnic group, religion,
91	marital status, or nationality of the consumer as a factor.
92	(b) Deny, cancel, or nonrenew a policy of personal
93	insurance solely on the basis of credit information without
94	consideration of any other applicable factor independent of
95	credit information and not expressly prohibited by paragraph
96	(a).
97	(c) Base an insured’s renewal rates for personal insurance
98	solely upon credit information without consideration of any
99	other applicable factor independent of credit information.
100	(d) Take an adverse action against a consumer solely
101	because he or she does not have a credit card account without
102	consideration of any other applicable factor independent of
103	credit information.
104	(e) Consider an absence of credit information or an
105	inability to calculate an insurance score in underwriting or
106	rating personal insurance, unless the insurer:
107	1. Treats the consumer as otherwise approved by the Chief
108	Financial Officer, if the insurer presents information that such
109	an absence or inability relates to the risk for the insurer;
110	2. Treats the consumer as if the applicant or insured had
111	neutral credit information, as defined by the insurer; or
112	3. Excludes the use of credit information as a factor and
113	uses only other underwriting criteria.
114	(f) Take an adverse action against a consumer based upon
115	credit information unless an insurer obtains and uses a credit
116	report issued or an insurance score calculated within 90 days
117	after the date the policy is first written or renewal is issued.
118	(g) Use credit information unless, not later than every 36
119	months following the last time that the insurer obtained current
120	credit information for the insured, the insurer recalculates the
121	insurance score or obtains an updated credit report. Regardless
122	of the requirements of this paragraph:
123	1. At annual renewal, upon the request of a consumer or
124	the consumer's agent, the insurer shall reunderwrite and rerate
125	the policy based upon a current credit report or insurance
126	score. An insurer need not recalculate the insurance score or
127	obtain the updated credit report of a consumer more frequently
128	than once in a 12-month period.
129	2. The insurer has the discretion to obtain current credit
130	information upon any renewal before the 36-month period, if
131	consistent with the insurer’s underwriting guidelines.
132	3. No insurer need obtain current credit information for
133	an insured, despite the requirements of subparagraph 1., if:
134	a. The insurer is treating the consumer as otherwise
135	approved by the Chief Financial Officer;
136	b. The insured is in the most favorably priced tier of the
137	insurer, within a group of affiliated insurers. However, the
138	insurer shall have the discretion to order such report if
139	consistent with its underwriting guidelines;
140	c. Credit was not used for underwriting or rating such
141	insured when the policy was initially written. However, the
142	insurer has the discretion to use credit for underwriting or
143	rating such insured upon renewal if consistent with its
144	underwriting guidelines; or
145	d. The insurer reevaluates the insured beginning no later
146	than 36 months after inception and thereafter based upon other
147	underwriting or rating factors, excluding credit information.
148	(h) Use the following as a negative factor in any
149	insurance scoring methodology or in reviewing credit information
150	for the purpose of underwriting or rating a policy of personal
151	insurance:
152	1. Credit inquiries not initiated by the consumer or
153	inquiries requested by the consumer for his or her own credit
154	information.
155	2. Inquiries relating to insurance coverage, if so
156	identified on a consumer’s credit report.
157	3. Collection accounts with a medical industry code, if so
158	identified on the consumer’s credit report.
159	4. Multiple lender inquiries, if coded by the consumer
160	reporting agency on the consumer’s credit report as being from
161	the home mortgage industry and made within 30 days of one
162	another, unless only one inquiry is considered.
163	5. Multiple lender inquiries, if coded by the consumer
164	reporting agency on the consumer's credit report as being from
165	the automobile lending industry and made within 30 days of one
166	another, unless only one inquiry is considered.
167	(i) Use a credit report as an underwriting or rating
168	factor unless the insurer can provide evidence that the methods
169	used to develop and implement the use of credit reports are
170	valid in predicting insurance risk.
171	(6) If it is determined through the dispute resolution
172	process set forth in the federal Fair Credit Reporting Act, 15
173	U.S.C. s. 1681i(a)(5), that the credit information of a current
174	insured was incorrect or incomplete and if the insurer receives
175	notice of such determination from the consumer reporting agency
176	or the insured, the insurer shall reunderwrite and rerate the
177	consumer within 30 days after receiving the notice. After
178	reunderwriting or rerating the insured, the insurer shall make
179	any adjustments necessary consistent with its underwriting and
180	rating guidelines. If an insurer determines that the insured has
181	overpaid premium, the insurer shall refund to the insured the
182	amount of overpayment calculated back to the shorter of the last
183	12 months of coverage or the actual policy period.
184	(7) If an insurer writing personal insurance uses credit
185	information in underwriting or rating an applicant or consumer:
186	(a) The insurer or its agent shall disclose, on the
187	insurance application or at the time the insurance application
188	is taken, that the insurer may obtain credit information in
189	connection with such application. Such disclosure shall be
190	either written or provided to an applicant in the same medium as
191	the application for insurance. The insurer need not provide the
192	disclosure statement required under this paragraph to any
193	insured on a renewal policy if such consumer has previously been
194	provided a disclosure statement. Use of the following example
195	disclosure statement constitutes compliance with this paragraph:
196
197	“In connection with this application for insurance, we
198	may review your credit report or obtain or use a
199	credit-based insurance score based on the information
200	contained in that credit report. We may use a third
201	party in connection with the development of your
202	insurance score.”
203
204	(b) The insurer shall secure authorization from each
205	applicant or consumer whose credit will be checked. If
206	permission or authorization is not granted, the absent credit
207	report shall be treated with neutrality and the applicant or
208	consumer shall not be penalized.
209	(8) If an insurer takes an adverse action based upon
210	credit information, the insurer shall:
211	(a) Provide notification to the consumer that an adverse
212	action has been taken, in accordance with the requirements of
213	the federal Fair Credit Reporting Act, 15 U.S.C. s. 1681m(a).
214	(b) Provide notification to the consumer explaining the
215	reasons for the adverse action. The reasons shall be provided
216	in sufficiently clear and specific language so that a person can
217	identify the basis for the insurer’s decision to take an adverse
218	action. The insurer shall identify the specific items in the
219	credit information which resulted in the adverse action. Such
220	items must be described such that the applicant or consumer can
221	identify and correct any errors included in the credit
222	information that contributed to the adverse action. The use of
223	generalized terms, including, but not limited to, “poor credit
224	history,” “poor credit rating,” or “poor insurance score,” does
225	not meet the explanation requirements of this paragraph.
226
227	Standardized credit explanations provided by consumer reporting
228	agencies or other third-party vendors are deemed to comply with
229	this subsection.
230	(9) An insurer that uses insurance scores to underwrite
231	and rate risks shall file its scoring models or other scoring
232	processes with the Office of Insurance Regulation of the
233	Financial Services Commission. A third party may file scoring
234	models on behalf of an insurer. A filing that includes
235	insurance scoring may include loss experience justifying the use
236	of credit information. Any filing relating to credit information
237	is considered a trade secret under s. 688.002 or s. 812.081,
238	Florida Statutes.
239	(10) An insurer shall indemnify, defend, and hold agents
240	harmless from and against all liability, fees, and costs arising
241	out of or relating to the actions, errors, or omissions of an
242	agent or a producer who obtains or uses credit information or
243	insurance scores for an insurer, provided the agent or producer
244	follows the instructions of or procedures established by the
245	insurer and complies with any applicable law or regulation.
246	Nothing in this subsection shall be construed to provide a
247	consumer or other insured with a cause of action that does not
248	exist in the absence of this subsection.
249	(11)(a) No consumer reporting agency shall provide or sell
250	data or lists that include any information that in whole or in
251	part was submitted in conjunction with an insurance inquiry
252	about a consumer’s credit information or a request for a credit
253	report or insurance score. Such information includes, but is
254	not limited to, the expiration dates of an insurance policy or
255	any other information that may identify time periods during
256	which a consumer’s insurance may expire and the terms and
257	conditions of the consumer’s insurance coverage.
258	(b) The restrictions provided in paragraph (a) do not
259	apply to data or lists the consumer reporting agency supplies to
260	the insurance agent or producer from whom information was
261	received, the insurer on whose behalf such agent or producer
262	acted, or such insurer’s affiliates or holding companies.
263	(c) Nothing in this subsection shall be construed to
264	restrict any insurer from obtaining a claims history report or a
265	motor vehicle report.
266	(12) If any provision of this section or the application
267	thereof to any person or circumstance is held invalid, the
268	invalidity shall not affect other provisions or applications of
269	the section which can be given effect without the invalid
270	provision or application, and to this end the provisions of this
271	section are declared severable.
272	Section 2. The Office of Insurance Regulation of the
273	Financial Services Commission shall conduct a study of the use
274	of credit information as an underwriting and rating factor. The
275	study shall evaluate and determine the increased risk of
276	insurance loss posed by an individual's credit worthiness,
277	credit standing, or credit capacity and the appropriate weight
278	that should be given to such factors in determining insurability
279	in conjunction with other risk factors.
280	Section 3. If any law amended by this act was also amended
281	by a law enacted at the 2003 Regular Session of the Legislature,
282	such laws shall be construed as if they had been enacted at the
283	same session of the Legislature, and full effect shall be given
284	to each if possible.
285	Section 4. This act shall take effect October 1, 2003, and
286	shall apply to personal insurance policies written to be
287	effective or renewed on or after July 1, 2004.