Florida Senate - 2012 CS for SB 102
By the Committee on Commerce and Tourism; and Senator Siplin
577-02029-12 2012102c1
1 A bill to be entitled
2 An act relating to credit reports; prohibiting an
3 employer from using a job applicant’s credit report or
4 credit history to make certain hiring, compensation,
5 or other employment decisions; providing specific
6 situations where an employer may use such information;
7 providing definitions; providing exemptions for
8 certain types of employers; providing remedies for
9 aggrieved persons; providing for court costs;
10 providing for a plaintiff to post a bond in certain
11 situations; amending s. 626.9541, F.S.; prohibiting an
12 insurer using a rate, rating schedule, rating manual,
13 or an underwriting rule that is not contained in a
14 rating manual and is determined in whole or in part on
15 the basis of a credit report or credit score of an
16 insured; including the refusal to insure or continue
17 to insure any individual or risk because of the
18 insured’s or applicant’s credit report or credit score
19 among the list of activities constituting unfair
20 methods of competition and unfair or deceptive acts;
21 amending s. 626.9741, F.S.; prohibiting the use by
22 insurers of credit reports and credit scores in making
23 rating determinations; deleting provisions limiting
24 and regulating the use of credit scores by insurers
25 when making rating determinations; deleting the
26 definitions of the terms “adverse decision” and
27 “tier”; providing an effective date.
28
29 Be It Enacted by the Legislature of the State of Florida:
30
31 Section 1. Use of a job applicant’s credit report or credit
32 history.—
33 (1) Except as provided in subsection (2), an employer may
34 not use an applicant’s credit report or credit history for the
35 purpose of denying employment to the applicant or for
36 determining the applicant’s compensation or the terms,
37 conditions, or privileges of employment.
38 (2) An employer may request or use an applicant’s credit
39 report or credit history if:
40 (a) The information will be used for a purpose other than
41 one prohibited by this section;
42 (b) The employer has a bona fide purpose for requesting or
43 using information in the credit report or credit history which
44 is substantially related to the job; and
45 (c) The ability to request such information was disclosed
46 to the applicant and the employer obtained permission from the
47 applicant to request the information.
48 (3) For purposes of this section, a position for which an
49 employer has a bona fide purpose includes a position that:
50 (a) Is managerial or supervisory;
51 (b) Involves access to personal information of a customer,
52 employee, or employer, except for personal information
53 customarily provided in a retail transaction;
54 (c) Involves a fiduciary responsibility to the employer,
55 including the authority to issue payments, collect debts,
56 transfer money, or enter into contracts;
57 (d) Involves the use of an expense account or a corporate
58 debit or credit card;
59 (e) Authorizes the employee to have access to information,
60 including a trade secret, formula, pattern, compilation,
61 program, device, method, technique, or process that derives
62 actual or potential independent economic value from not being
63 generally known to, and not being readily ascertainable by
64 proper means by, other persons who can obtain economic value
65 from the disclosure or use of the information and is the subject
66 of efforts that are reasonable under the circumstances to
67 maintain its secrecy; or
68 (f) Involves public safety, such as a law enforcement
69 officer, peace officer, or other position involving enforcement
70 of state or federal criminal laws.
71 (4) As used in paragraph (3)(a), the term:
72 (a) “Managerial” means a position that requires an
73 individual to formulate and effectuate management policies by
74 expressing and making operative the decisions of the employer.
75 (b) “Supervisory” means a position in which an individual
76 has the authority, in the interest of the employer, to hire,
77 transfer, suspend, lay off, recall, promote, discharge, assign,
78 reward, or discipline other employees, or the responsibility to
79 direct them, adjust their grievances, or recommend such action
80 where the authority or responsibility is not merely routine or
81 clerical, but requires the use of independent judgment.
82 (5) This section does not apply to an employer that is:
83 (a) Expressly permitted or required to inquire into an
84 applicant’s credit report or credit history for employment
85 purposes pursuant to a federal or state law.
86 (b) A financial institution that accepts deposits that are
87 insured by a federal agency, or an affiliate or subsidiary of
88 the financial institution.
89 (c) A credit union or state-chartered bank registered with
90 the Office of Financial Regulation.
91 (d) An entity that is registered as an investment advisor
92 with the United States Securities and Exchange Commission, or an
93 affiliate of the entity.
94 (6)(a) Without regard to any other remedy or relief to
95 which a person is entitled, a person aggrieved by a violation of
96 this section may bring an action to obtain a declaratory
97 judgment that an act or practice violates this section and to
98 enjoin the violator from further violations.
99 (b) A person who has suffered a loss as a result of a
100 violation of this section and prevails may recover actual
101 damages, plus court costs.
102 (c) In any action brought under this section, upon motion
103 of the defendant, alleging that the action is frivolous, without
104 legal or factual merit, or brought for the purpose of
105 harassment, the court may, after hearing evidence as to the
106 necessity therefor, require the plaintiff to post bond in an
107 amount that the court finds reasonable to indemnify the
108 defendant for any damages incurred, including reasonable
109 attorney fees. This subsection does not apply to any action
110 initiated by the enforcing authority.
111 Section 2. Paragraphs (o) and (x) of subsection (1) of
112 section 626.9541, Florida Statutes, are amended to read:
113 626.9541 Unfair methods of competition and unfair or
114 deceptive acts or practices defined.—
115 (1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
116 ACTS.—The following are defined as unfair methods of competition
117 and unfair or deceptive acts or practices:
118 (o) Illegal dealings in premiums; excess or reduced charges
119 for insurance.—
120 1. Knowingly collecting any sum as a premium or charge for
121 insurance, which is not then provided, or is not in due course
122 to be provided, subject to acceptance of the risk by the
123 insurer, by an insurance policy issued by an insurer as
124 permitted by this code.
125 2. Knowingly collecting as a premium or charge for
126 insurance any sum in excess of or less than the premium or
127 charge applicable to such insurance, in accordance with the
128 applicable classifications and rates as filed with and approved
129 by the office, and as specified in the policy; or, in cases when
130 classifications, premiums, or rates are not required by this
131 code to be so filed and approved, premiums and charges collected
132 from a Florida resident in excess of or less than those
133 specified in the policy and as fixed by the insurer. This
134 provision does shall not be deemed to prohibit the charging and
135 collection, by surplus lines agents licensed under part VIII of
136 this chapter, of the amount of applicable state and federal
137 taxes, or fees as authorized by s. 626.916(4), in addition to
138 the premium required by the insurer or the charging and
139 collection, by licensed agents, of the exact amount of any
140 discount or other such fee charged by a credit card facility in
141 connection with the use of a credit card, as authorized by
142 subparagraph (q)3., in addition to the premium required by the
143 insurer. This subparagraph does shall not be construed to
144 prohibit collection of a premium for a universal life or a
145 variable or indeterminate value insurance policy made in
146 accordance with the terms of the contract.
147 3.a. Imposing or requesting an additional premium for a
148 policy of motor vehicle liability, personal injury protection,
149 medical payment, or collision insurance or any combination
150 thereof or refusing to renew the policy solely because the
151 insured was involved in a motor vehicle accident unless the
152 insurer’s file contains information from which the insurer in
153 good faith determines that the insured was substantially at
154 fault in the accident.
155 b. An insurer that which imposes and collects such a
156 surcharge or which refuses to renew such policy shall, in
157 conjunction with the notice of premium due or notice of
158 nonrenewal, notify the named insured that he or she is entitled
159 to reimbursement of such amount or renewal of the policy under
160 the conditions listed below and will subsequently reimburse him
161 or her or renew the policy, if the named insured demonstrates
162 that the operator involved in the accident was:
163 (I) Lawfully parked;
164 (II) Reimbursed by, or on behalf of, a person responsible
165 for the accident or has a judgment against such person;
166 (III) Struck in the rear by another vehicle headed in the
167 same direction and was not convicted of a moving traffic
168 violation in connection with the accident;
169 (IV) Hit by a “hit-and-run” driver, if the accident was
170 reported to the proper authorities within 24 hours after
171 discovering the accident;
172 (V) Not convicted of a moving traffic violation in
173 connection with the accident, but the operator of the other
174 automobile involved in such accident was convicted of a moving
175 traffic violation;
176 (VI) Finally adjudicated not to be liable by a court of
177 competent jurisdiction;
178 (VII) In receipt of a traffic citation which was dismissed
179 or nolle prossed; or
180 (VIII) Not at fault as evidenced by a written statement
181 from the insured establishing facts demonstrating lack of fault
182 which are not rebutted by information in the insurer’s file from
183 which the insurer in good faith determines that the insured was
184 substantially at fault.
185 c. In addition to the other provisions of this
186 subparagraph, an insurer may not fail to renew a policy if the
187 insured has had only one accident in which he or she was at
188 fault within the current 3-year period. However, an insurer may
189 nonrenew a policy for reasons other than accidents in accordance
190 with s. 627.728. This subparagraph does not prohibit nonrenewal
191 of a policy under which the insured has had three or more
192 accidents, regardless of fault, during the most recent 3-year
193 period.
194 4. Imposing or requesting an additional premium for, or
195 refusing to renew, a policy for motor vehicle insurance solely
196 because the insured committed a noncriminal traffic infraction
197 as described in s. 318.14 unless the infraction is:
198 a. A second infraction committed within an 18-month period,
199 or a third or subsequent infraction committed within a 36-month
200 period.
201 b. A violation of s. 316.183, when such violation is a
202 result of exceeding the lawful speed limit by more than 15 miles
203 per hour.
204 5. Upon the request of the insured, the insurer and
205 licensed agent shall supply to the insured the complete proof of
206 fault or other criteria that which justifies the additional
207 charge or cancellation.
208 6. An No insurer may not shall impose or request an
209 additional premium for motor vehicle insurance, cancel or refuse
210 to issue a policy, or refuse to renew a policy because the
211 insured or the applicant is a handicapped or physically disabled
212 person, so long as such handicap or physical disability does not
213 substantially impair such person’s mechanically assisted driving
214 ability.
215 7. An No insurer may not cancel or otherwise terminate any
216 insurance contract or coverage, or require execution of a
217 consent to rate endorsement, during the stated policy term for
218 the purpose of offering to issue, or issuing, a similar or
219 identical contract or coverage to the same insured with the same
220 exposure at a higher premium rate or continuing an existing
221 contract or coverage with the same exposure at an increased
222 premium.
223 8. An No insurer may not issue a nonrenewal notice on any
224 insurance contract or coverage, or require execution of a
225 consent to rate endorsement, for the purpose of offering to
226 issue, or issuing, a similar or identical contract or coverage
227 to the same insured at a higher premium rate or continuing an
228 existing contract or coverage at an increased premium without
229 meeting any applicable notice requirements.
230 9. An No insurer may not shall, with respect to premiums
231 charged for motor vehicle insurance, unfairly discriminate
232 solely on the basis of age, sex, marital status, or scholastic
233 achievement.
234 10. An insurer may not use any rate, rating schedule,
235 rating manual, or underwriting rule that is not contained in a
236 rating manual and that is determined in whole or in part on the
237 basis of an insured’s credit report or credit score as defined
238 in s. 626.9741.
239 11.10. Imposing or requesting an additional premium for
240 motor vehicle comprehensive or uninsured motorist coverage
241 solely because the insured was involved in a motor vehicle
242 accident or was convicted of a moving traffic violation.
243 12.11. An No insurer may not shall cancel or issue a
244 nonrenewal notice on any insurance policy or contract without
245 complying with any applicable cancellation or nonrenewal
246 provision required under the Florida Insurance Code.
247 13.12. An No insurer may not shall impose or request an
248 additional premium, cancel a policy, or issue a nonrenewal
249 notice on any insurance policy or contract because of any
250 traffic infraction when adjudication has been withheld and no
251 points have been assessed pursuant to s. 318.14(9) and (10).
252 However, this subparagraph does not apply to traffic infractions
253 involving accidents in which the insurer has incurred a loss due
254 to the fault of the insured.
255 (x) Refusal to insure.—In addition to other provisions of
256 this code, the refusal to insure, or continue to insure, any
257 individual or risk solely because of:
258 1. Race, color, creed, marital status, sex, or national
259 origin;
260 2. The residence, age, or lawful occupation of the
261 individual or the location of the risk, unless there is a
262 reasonable relationship between the residence, age, or lawful
263 occupation of the individual or the location of the risk and the
264 coverage issued or to be issued;
265 3. The insured’s or applicant’s failure to agree to place
266 collateral business with any insurer, unless the coverage
267 applied for would provide liability coverage which is excess
268 over that provided in policies maintained on property or motor
269 vehicles;
270 4. The insured’s or applicant’s failure to purchase
271 noninsurance services or commodities, including automobile
272 services as defined in s. 624.124;
273 5. The fact that the insured or applicant is a public
274 official; or
275 6. The fact that the insured or applicant had been
276 previously refused insurance coverage by any insurer, when such
277 refusal to insure or continue to insure for this reason occurs
278 with such frequency as to indicate a general business practice;
279 or.
280 7. The insured’s or applicant’s credit report or credit
281 score as defined in s. 626.9741.
282 Section 3. Section 626.9741, Florida Statutes, is amended
283 to read:
284 626.9741 Use of credit reports and credit scores by
285 insurers.—
286 (1) An insurer may not use credit reports or credit scores
287 in making rating determinations. The purpose of this section is
288 to regulate and limit the use of credit reports and credit
289 scores by insurers for underwriting and rating purposes. This
290 section applies only to personal lines motor vehicle insurance
291 and personal lines residential insurance, which includes
292 homeowners, mobile home owners’ dwelling, tenants, condominium
293 unit owners, cooperative unit owners, and similar types of
294 insurance.
295 (2) As used in this section, the term:
296 (a) “Adverse decision” means a decision to refuse to issue
297 or renew a policy of insurance; to issue a policy with
298 exclusions or restrictions; to increase the rates or premium
299 charged for a policy of insurance; to place an insured or
300 applicant in a rating tier that does not have the lowest
301 available rates for which that insured or applicant is otherwise
302 eligible; or to place an applicant or insured with a company
303 operating under common management, control, or ownership which
304 does not offer the lowest rates available, within the affiliate
305 group of insurance companies, for which that insured or
306 applicant is otherwise eligible.
307 (a)(b) “Credit report” means any written, oral, or other
308 communication of any information by a consumer reporting agency,
309 as defined in the federal Fair Credit Reporting Act, 15 U.S.C.
310 ss. 1681 et seq., bearing on a consumer’s credit worthiness,
311 credit standing, or credit capacity, which is used or expected
312 to be used or collected as a factor to establish a person’s
313 eligibility for credit or insurance, or any other purpose
314 authorized pursuant to the applicable provision of such federal
315 act. A credit score alone, as calculated by a credit reporting
316 agency or by or for the insurer, may not be considered a credit
317 report.
318 (b)(c) “Credit score” means a score, grade, or value that
319 is derived by using any or all data from a credit report in any
320 type of model, method, or program, whether electronically, in an
321 algorithm, computer software or program, or any other process,
322 for the purpose of grading or ranking credit report data.
323 (d) “Tier” means a category within a single insurer into
324 which insureds with substantially similar risk, exposure, or
325 expense factors are placed for purposes of determining rate or
326 premium.
327 (3) An insurer must inform an applicant or insured, in the
328 same medium as the application is taken, that a credit report or
329 score is being requested for underwriting or rating purposes. An
330 insurer that makes an adverse decision based, in whole or in
331 part, upon a credit report must provide at no charge, a copy of
332 the credit report to the applicant or insured or provide the
333 applicant or insured with the name, address, and telephone
334 number of the consumer reporting agency from which the insured
335 or applicant may obtain the credit report. The insurer must
336 provide notification to the consumer explaining the reasons for
337 the adverse decision. The reasons must be provided in
338 sufficiently clear and specific language so that a person can
339 identify the basis for the insurer’s adverse decision. Such
340 notification shall include a description of the four primary
341 reasons, or such fewer number as existed, which were the primary
342 influences of the adverse decision. The use of generalized terms
343 such as “poor credit history,” “poor credit rating,” or “poor
344 insurance score” does not meet the explanation requirements of
345 this subsection. A credit score may not be used in underwriting
346 or rating insurance unless the scoring process produces
347 information in sufficient detail to permit compliance with the
348 requirements of this subsection. It shall not be deemed an
349 adverse decision if, due to the insured’s credit report or
350 credit score, the insured continues to receive a less favorable
351 rate or placement in a less favorable tier or company at the
352 time of renewal except for renewals or reunderwriting required
353 by this section.
354 (4)(a) An insurer may not request a credit report or score
355 based upon the race, color, religion, marital status, age,
356 gender, income, national origin, or place of residence of the
357 applicant or insured.
358 (b) An insurer may not make an adverse decision solely
359 because of information contained in a credit report or score
360 without consideration of any other underwriting or rating
361 factor.
362 (c) An insurer may not make an adverse decision or use a
363 credit score that could lead to such a decision if based, in
364 whole or in part, on:
365 1. The absence of, or an insufficient, credit history, in
366 which instance the insurer shall:
367 a. Treat the consumer as otherwise approved by the Office
368 of Insurance Regulation if the insurer presents information that
369 such an absence or inability is related to the risk for the
370 insurer;
371 b. Treat the consumer as if the applicant or insured had
372 neutral credit information, as defined by the insurer;
373 c. Exclude the use of credit information as a factor and
374 use only other underwriting criteria;
375 2. Collection accounts with a medical industry code, if so
376 identified on the consumer’s credit report;
377 3. Place of residence; or
378 4. Any other circumstance that the Financial Services
379 Commission determines, by rule, lacks sufficient statistical
380 correlation and actuarial justification as a predictor of
381 insurance risk.
382 (d) An insurer may use the number of credit inquiries
383 requested or made regarding the applicant or insured except for:
384 1. Credit inquiries not initiated by the consumer or
385 inquiries requested by the consumer for his or her own credit
386 information.
387 2. Inquiries relating to insurance coverage, if so
388 identified on a consumer’s credit report.
389 3. Collection accounts with a medical industry code, if so
390 identified on the consumer’s credit report.
391 4. Multiple lender inquiries, if coded by the consumer
392 reporting agency on the consumer’s credit report as being from
393 the home mortgage industry and made within 30 days of one
394 another, unless only one inquiry is considered.
395 5. Multiple lender inquiries, if coded by the consumer
396 reporting agency on the consumer’s credit report as being from
397 the automobile lending industry and made within 30 days of one
398 another, unless only one inquiry is considered.
399 (e) An insurer must, upon the request of an applicant or
400 insured, provide a means of appeal for an applicant or insured
401 whose credit report or credit score is unduly influenced by a
402 dissolution of marriage, the death of a spouse, or temporary
403 loss of employment. The insurer must complete its review within
404 10 business days after the request by the applicant or insured
405 and receipt of reasonable documentation requested by the
406 insurer, and, if the insurer determines that the credit report
407 or credit score was unduly influenced by any of such factors,
408 the insurer shall treat the applicant or insured as if the
409 applicant or insured had neutral credit information or shall
410 exclude the credit information, as defined by the insurer,
411 whichever is more favorable to the applicant or insured. An
412 insurer shall not be considered out of compliance with its
413 underwriting rules or rates or forms filed with the Office of
414 Insurance Regulation or out of compliance with any other state
415 law or rule as a result of granting any exceptions pursuant to
416 this subsection.
417 (5) A rate filing that uses credit reports or credit scores
418 must comply with the requirements of s. 627.062 or s. 627.0651
419 to ensure that rates are not excessive, inadequate, or unfairly
420 discriminatory.
421 (6) An insurer that requests or uses credit reports and
422 credit scoring in its underwriting and rating methods shall
423 maintain and adhere to established written procedures that
424 reflect the restrictions set forth in the federal Fair Credit
425 Reporting Act, this section, and all rules related thereto.
426 (7)(a) An insurer shall establish procedures to review the
427 credit history of an insured who was adversely affected by the
428 use of the insured’s credit history at the initial rating of the
429 policy, or at a subsequent renewal thereof. This review must be
430 performed at a minimum of once every 2 years or at the request
431 of the insured, whichever is sooner, and the insurer shall
432 adjust the premium of the insured to reflect any improvement in
433 the credit history. The procedures must provide that, with
434 respect to existing policyholders, the review of a credit report
435 will not be used by the insurer to cancel, refuse to renew, or
436 require a change in the method of payment or payment plan.
437 (b) However, as an alternative to the requirements of
438 paragraph (a), an insurer that used a credit report or credit
439 score for an insured upon inception of a policy, who will not
440 use a credit report or score for reunderwriting, shall
441 reevaluate the insured within the first 3 years after inception,
442 based on other allowable underwriting or rating factors,
443 excluding credit information if the insurer does not increase
444 the rates or premium charged to the insured based on the
445 exclusion of credit reports or credit scores.
446 (3)(8) The commission may adopt rules to administer this
447 section. The rules may include, but need not be limited to:
448 (a) Information that must be included in filings to
449 demonstrate compliance with subsection (3).
450 (b) Statistical detail that insurers using credit reports
451 or scores under subsection (5) must retain and report annually
452 to the Office of Insurance Regulation.
453 (c) Standards that ensure that rates or premiums associated
454 with the use of a credit report or score are not unfairly
455 discriminatory, based upon race, color, religion, marital
456 status, age, gender, income, national origin, or place of
457 residence.
458 (d) Standards for review of models, methods, programs, or
459 any other process by which to grade or rank credit report data
460 and which may produce credit scores in order to ensure that the
461 insurer demonstrates that such grading, ranking, or scoring is
462 valid in predicting insurance risk of an applicant or insured.
463 Section 4. This act shall take effect July 1, 2012.