Florida Senate - 2009 SB 1524
By Senator Storms
10-00508B-09 20091524__
1 A bill to be entitled
2 An act relating to insurance; amending s. 626.9541,
3 F.S.; prohibiting any insurer charging premiums for
4 motor vehicle insurance from using a rate, rating
5 schedule, rating manual, or an underwriting rule that
6 is not contained in a rating manual and is determined
7 in whole or in part on the basis of certain
8 characteristics of an insured; including the refusal
9 to insure or continue to insure any individual or risk
10 because of educational level, trade, business,
11 occupation, profession, credit report, credit score,
12 or certain forms of lawful employment among the list
13 of activities constituting unfair methods of
14 competition and unfair or deceptive acts; amending s.
15 626.9741, F.S.; prohibiting the use by insurers of
16 credit reports and credit scores in making rating
17 determinations; defining the terms “credit report” and
18 “credit score”; deleting provisions limiting and
19 regulating the use of credit score by insurers when
20 making rating determinations; deleting the definition
21 of “adverse decision” and “tier”; deleting provisions
22 authorizing the Financial Services Commission to adopt
23 rules; providing an effective date.
24
25 Be It Enacted by the Legislature of the State of Florida:
26
27 Section 1. Paragraphs (o) and (x) of subsection (1) of
28 section 626.9541, Florida Statutes, are amended to read:
29 626.9541 Unfair methods of competition and unfair or
30 deceptive acts or practices defined.—
31 (1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
32 ACTS.—The following are defined as unfair methods of competition
33 and unfair or deceptive acts or practices:
34 (o) Illegal dealings in premiums; excess or reduced charges
35 for insurance.—
36 1. Knowingly collecting any sum as a premium or charge for
37 insurance, which is not then provided, or is not in due course
38 to be provided, subject to acceptance of the risk by the
39 insurer, by an insurance policy issued by an insurer as
40 permitted by this code.
41 2. Knowingly collecting as a premium or charge for
42 insurance any sum in excess of or less than the premium or
43 charge applicable to such insurance, in accordance with the
44 applicable classifications and rates as filed with and approved
45 by the office, and as specified in the policy; or, in cases when
46 classifications, premiums, or rates are not required by this
47 code to be so filed and approved, premiums and charges collected
48 from a Florida resident in excess of or less than those
49 specified in the policy and as fixed by the insurer. This
50 provision shall not be deemed to prohibit the charging and
51 collection, by surplus lines agents licensed under part VIII of
52 this chapter, of the amount of applicable state and federal
53 taxes, or fees as authorized by s. 626.916(4), in addition to
54 the premium required by the insurer or the charging and
55 collection, by licensed agents, of the exact amount of any
56 discount or other such fee charged by a credit card facility in
57 connection with the use of a credit card, as authorized by
58 subparagraph (q)3., in addition to the premium required by the
59 insurer. This subparagraph shall not be construed to prohibit
60 collection of a premium for a universal life or a variable or
61 indeterminate value insurance policy made in accordance with the
62 terms of the contract.
63 3.a. Imposing or requesting an additional premium for a
64 policy of motor vehicle liability, personal injury protection,
65 medical payment, or collision insurance or any combination
66 thereof or refusing to renew the policy solely because the
67 insured was involved in a motor vehicle accident unless the
68 insurer's file contains information from which the insurer in
69 good faith determines that the insured was substantially at
70 fault in the accident.
71 b. An insurer which imposes and collects such a surcharge
72 or which refuses to renew such policy shall, in conjunction with
73 the notice of premium due or notice of nonrenewal, notify the
74 named insured that he or she is entitled to reimbursement of
75 such amount or renewal of the policy under the conditions listed
76 below and will subsequently reimburse him or her or renew the
77 policy, if the named insured demonstrates that the operator
78 involved in the accident was:
79 (I) Lawfully parked;
80 (II) Reimbursed by, or on behalf of, a person responsible
81 for the accident or has a judgment against such person;
82 (III) Struck in the rear by another vehicle headed in the
83 same direction and was not convicted of a moving traffic
84 violation in connection with the accident;
85 (IV) Hit by a “hit-and-run” driver, if the accident was
86 reported to the proper authorities within 24 hours after
87 discovering the accident;
88 (V) Not convicted of a moving traffic violation in
89 connection with the accident, but the operator of the other
90 automobile involved in such accident was convicted of a moving
91 traffic violation;
92 (VI) Finally adjudicated not to be liable by a court of
93 competent jurisdiction;
94 (VII) In receipt of a traffic citation which was dismissed
95 or nolle prossed; or
96 (VIII) Not at fault as evidenced by a written statement
97 from the insured establishing facts demonstrating lack of fault
98 which are not rebutted by information in the insurer's file from
99 which the insurer in good faith determines that the insured was
100 substantially at fault.
101 c. In addition to the other provisions of this
102 subparagraph, an insurer may not fail to renew a policy if the
103 insured has had only one accident in which he or she was at
104 fault within the current 3-year period. However, an insurer may
105 nonrenew a policy for reasons other than accidents in accordance
106 with s. 627.728. This subparagraph does not prohibit nonrenewal
107 of a policy under which the insured has had three or more
108 accidents, regardless of fault, during the most recent 3-year
109 period.
110 4. Imposing or requesting an additional premium for, or
111 refusing to renew, a policy for motor vehicle insurance solely
112 because the insured committed a noncriminal traffic infraction
113 as described in s. 318.14 unless the infraction is:
114 a. A second infraction committed within an 18-month period,
115 or a third or subsequent infraction committed within a 36-month
116 period.
117 b. A violation of s. 316.183, when such violation is a
118 result of exceeding the lawful speed limit by more than 15 miles
119 per hour.
120 5. Upon the request of the insured, the insurer and
121 licensed agent shall supply to the insured the complete proof of
122 fault or other criteria which justifies the additional charge or
123 cancellation.
124 6. No insurer shall impose or request an additional premium
125 for motor vehicle insurance, cancel or refuse to issue a policy,
126 or refuse to renew a policy because the insured or the applicant
127 is a handicapped or physically disabled person, so long as such
128 handicap or physical disability does not substantially impair
129 such person's mechanically assisted driving ability.
130 7. No insurer may cancel or otherwise terminate any
131 insurance contract or coverage, or require execution of a
132 consent to rate endorsement, during the stated policy term for
133 the purpose of offering to issue, or issuing, a similar or
134 identical contract or coverage to the same insured with the same
135 exposure at a higher premium rate or continuing an existing
136 contract or coverage with the same exposure at an increased
137 premium.
138 8. No insurer may issue a nonrenewal notice on any
139 insurance contract or coverage, or require execution of a
140 consent to rate endorsement, for the purpose of offering to
141 issue, or issuing, a similar or identical contract or coverage
142 to the same insured at a higher premium rate or continuing an
143 existing contract or coverage at an increased premium without
144 meeting any applicable notice requirements.
145 9. No insurer shall, with respect to premiums charged for
146 motor vehicle insurance, unfairly discriminate solely on the
147 basis of age, sex, marital status, or scholastic achievement.
148 10. No insurer shall, with respect to premiums charged for
149 motor vehicle insurance, use any rate, rating schedule, rating
150 manual, or underwriting rule that is not contained in a rating
151 manual and that is determined in whole or in part on the basis
152 of any of the following as they relate to an insured:
153 a. Educational level.
154 b. Trade, business, occupation, profession, or any lawful
155 form of employment that does not directly involve the use of one
156 or more vehicles specifically insured or identified in the
157 insurance policy.
158 c. Credit report or credit score as defined in s. 626.9741.
159 11.10. Imposing or requesting an additional premium for
160 motor vehicle comprehensive or uninsured motorist coverage
161 solely because the insured was involved in a motor vehicle
162 accident or was convicted of a moving traffic violation.
163 12.11. No insurer shall cancel or issue a nonrenewal notice
164 on any insurance policy or contract without complying with any
165 applicable cancellation or nonrenewal provision required under
166 the Florida Insurance Code.
167 13.12. No insurer shall impose or request an additional
168 premium, cancel a policy, or issue a nonrenewal notice on any
169 insurance policy or contract because of any traffic infraction
170 when adjudication has been withheld and no points have been
171 assessed pursuant to s. 318.14(9) and (10). However, this
172 subparagraph does not apply to traffic infractions involving
173 accidents in which the insurer has incurred a loss due to the
174 fault of the insured.
175 (x) Refusal to insure.—In addition to other provisions of
176 this code, the refusal to insure, or continue to insure, any
177 individual or risk because of the individual's educational
178 level, trade, business, occupation, profession, any form of
179 lawful employment, or credit report or credit score as defined
180 in s. 626.9741, or solely because of:
181 1. Race, color, creed, marital status, gender sex, or
182 national origin;
183 2. The residence, age, or lawful occupation of the
184 individual or the location of the risk, unless there is a
185 reasonable relationship between the residence, age, or lawful
186 occupation of the individual or the location of the risk and the
187 coverage issued or to be issued;
188 3. The insured's or applicant's failure to agree to place
189 collateral business with any insurer, unless the coverage
190 applied for would provide liability coverage which is excess
191 over that provided in policies maintained on property or motor
192 vehicles;
193 4. The insured's or applicant's failure to purchase
194 noninsurance services or commodities, including automobile
195 services as defined in s. 624.124;
196 5. The fact that the insured or applicant is a public
197 official; or
198 6. The fact that the insured or applicant had been
199 previously refused insurance coverage by any insurer, when such
200 refusal to insure or continue to insure for this reason occurs
201 with such frequency as to indicate a general business practice.
202 Section 2. Section 626.9741, Florida Statutes, is amended
203 to read:
204 626.9741 Use of credit reports and credit scores by
205 insurers.—An insurer may not use credit reports or credit scores
206 in making rating determinations. For purposes of this section,
207 the term:
208 (1) The purpose of this section is to regulate and limit
209 the use of credit reports and credit scores by insurers for
210 underwriting and rating purposes. This section applies only to
211 personal lines motor vehicle insurance and personal lines
212 residential insurance, which includes homeowners, mobile home
213 owners' dwelling, tenants, condominium unit owners, cooperative
214 unit owners, and similar types of insurance.
215 (2) As used in this section, the term:
216 (a) “Adverse decision” means a decision to refuse to issue
217 or renew a policy of insurance; to issue a policy with
218 exclusions or restrictions; to increase the rates or premium
219 charged for a policy of insurance; to place an insured or
220 applicant in a rating tier that does not have the lowest
221 available rates for which that insured or applicant is otherwise
222 eligible; or to place an applicant or insured with a company
223 operating under common management, control, or ownership which
224 does not offer the lowest rates available, within the affiliate
225 group of insurance companies, for which that insured or
226 applicant is otherwise eligible.
227 (1)(b) “Credit report” means any written, oral, or other
228 communication of any information by a consumer reporting agency,
229 as defined in the federal Fair Credit Reporting Act, 15 U.S.C.
230 ss. 1681 et seq., bearing on a consumer's credit worthiness,
231 credit standing, or credit capacity, which is used or expected
232 to be used or collected as a factor to establish a person's
233 eligibility for credit or insurance, or any other purpose
234 authorized pursuant to the applicable provision of such federal
235 act. A credit score alone, as calculated by a credit reporting
236 agency or by or for the insurer, may not be considered a credit
237 report.
238 (2)(c) “Credit score” means a score, grade, or value that
239 is derived by using any or all data from a credit report in any
240 type of model, method, or program, whether electronically, in an
241 algorithm, computer software or program, or any other process,
242 for the purpose of grading or ranking credit report data.
243 (d) “Tier” means a category within a single insurer into
244 which insureds with substantially similar risk, exposure, or
245 expense factors are placed for purposes of determining rate or
246 premium.
247 (3) An insurer must inform an applicant or insured, in the
248 same medium as the application is taken, that a credit report or
249 score is being requested for underwriting or rating purposes. An
250 insurer that makes an adverse decision based, in whole or in
251 part, upon a credit report must provide at no charge, a copy of
252 the credit report to the applicant or insured or provide the
253 applicant or insured with the name, address, and telephone
254 number of the consumer reporting agency from which the insured
255 or applicant may obtain the credit report. The insurer must
256 provide notification to the consumer explaining the reasons for
257 the adverse decision. The reasons must be provided in
258 sufficiently clear and specific language so that a person can
259 identify the basis for the insurer's adverse decision. Such
260 notification shall include a description of the four primary
261 reasons, or such fewer number as existed, which were the primary
262 influences of the adverse decision. The use of generalized terms
263 such as “poor credit history,” “poor credit rating,” or “poor
264 insurance score” does not meet the explanation requirements of
265 this subsection. A credit score may not be used in underwriting
266 or rating insurance unless the scoring process produces
267 information in sufficient detail to permit compliance with the
268 requirements of this subsection. It shall not be deemed an
269 adverse decision if, due to the insured's credit report or
270 credit score, the insured continues to receive a less favorable
271 rate or placement in a less favorable tier or company at the
272 time of renewal except for renewals or reunderwriting required
273 by this section.
274 (4)(a) An insurer may not request a credit report or score
275 based upon the race, color, religion, marital status, age,
276 gender, income, national origin, or place of residence of the
277 applicant or insured.
278 (b) An insurer may not make an adverse decision solely
279 because of information contained in a credit report or score
280 without consideration of any other underwriting or rating
281 factor.
282 (c) An insurer may not make an adverse decision or use a
283 credit score that could lead to such a decision if based, in
284 whole or in part, on:
285 1. The absence of, or an insufficient, credit history, in
286 which instance the insurer shall:
287 a. Treat the consumer as otherwise approved by the Office
288 of Insurance Regulation if the insurer presents information that
289 such an absence or inability is related to the risk for the
290 insurer;
291 b. Treat the consumer as if the applicant or insured had
292 neutral credit information, as defined by the insurer;
293 c. Exclude the use of credit information as a factor and
294 use only other underwriting criteria;
295 2. Collection accounts with a medical industry code, if so
296 identified on the consumer's credit report;
297 3. Place of residence; or
298 4. Any other circumstance that the Financial Services
299 Commission determines, by rule, lacks sufficient statistical
300 correlation and actuarial justification as a predictor of
301 insurance risk.
302 (d) An insurer may use the number of credit inquiries
303 requested or made regarding the applicant or insured except for:
304 1. Credit inquiries not initiated by the consumer or
305 inquiries requested by the consumer for his or her own credit
306 information.
307 2. Inquiries relating to insurance coverage, if so
308 identified on a consumer's credit report.
309 3. Collection accounts with a medical industry code, if so
310 identified on the consumer's credit report.
311 4. Multiple lender inquiries, if coded by the consumer
312 reporting agency on the consumer's credit report as being from
313 the home mortgage industry and made within 30 days of one
314 another, unless only one inquiry is considered.
315 5. Multiple lender inquiries, if coded by the consumer
316 reporting agency on the consumer's credit report as being from
317 the automobile lending industry and made within 30 days of one
318 another, unless only one inquiry is considered.
319 (e) An insurer must, upon the request of an applicant or
320 insured, provide a means of appeal for an applicant or insured
321 whose credit report or credit score is unduly influenced by a
322 dissolution of marriage, the death of a spouse, or temporary
323 loss of employment. The insurer must complete its review within
324 10 business days after the request by the applicant or insured
325 and receipt of reasonable documentation requested by the
326 insurer, and, if the insurer determines that the credit report
327 or credit score was unduly influenced by any of such factors,
328 the insurer shall treat the applicant or insured as if the
329 applicant or insured had neutral credit information or shall
330 exclude the credit information, as defined by the insurer,
331 whichever is more favorable to the applicant or insured. An
332 insurer shall not be considered out of compliance with its
333 underwriting rules or rates or forms filed with the Office of
334 Insurance Regulation or out of compliance with any other state
335 law or rule as a result of granting any exceptions pursuant to
336 this subsection.
337 (5) A rate filing that uses credit reports or credit scores
338 must comply with the requirements of s. 627.062 or s. 627.0651
339 to ensure that rates are not excessive, inadequate, or unfairly
340 discriminatory.
341 (6) An insurer that requests or uses credit reports and
342 credit scoring in its underwriting and rating methods shall
343 maintain and adhere to established written procedures that
344 reflect the restrictions set forth in the federal Fair Credit
345 Reporting Act, this section, and all rules related thereto.
346 (7)(a) An insurer shall establish procedures to review the
347 credit history of an insured who was adversely affected by the
348 use of the insured's credit history at the initial rating of the
349 policy, or at a subsequent renewal thereof. This review must be
350 performed at a minimum of once every 2 years or at the request
351 of the insured, whichever is sooner, and the insurer shall
352 adjust the premium of the insured to reflect any improvement in
353 the credit history. The procedures must provide that, with
354 respect to existing policyholders, the review of a credit report
355 will not be used by the insurer to cancel, refuse to renew, or
356 require a change in the method of payment or payment plan.
357 (b) However, as an alternative to the requirements of
358 paragraph (a), an insurer that used a credit report or credit
359 score for an insured upon inception of a policy, who will not
360 use a credit report or score for reunderwriting, shall
361 reevaluate the insured within the first 3 years after inception,
362 based on other allowable underwriting or rating factors,
363 excluding credit information if the insurer does not increase
364 the rates or premium charged to the insured based on the
365 exclusion of credit reports or credit scores.
366 (8) The commission may adopt rules to administer this
367 section. The rules may include, but need not be limited to:
368 (a) Information that must be included in filings to
369 demonstrate compliance with subsection (3).
370 (b) Statistical detail that insurers using credit reports
371 or scores under subsection (5) must retain and report annually
372 to the Office of Insurance Regulation.
373 (c) Standards that ensure that rates or premiums associated
374 with the use of a credit report or score are not unfairly
375 discriminatory, based upon race, color, religion, marital
376 status, age, gender, income, national origin, or place of
377 residence.
378 (d) Standards for review of models, methods, programs, or
379 any other process by which to grade or rank credit report data
380 and which may produce credit scores in order to ensure that the
381 insurer demonstrates that such grading, ranking, or scoring is
382 valid in predicting insurance risk of an applicant or insured.
383 Section 3. This act shall take effect July 1, 2009.