Florida Senate - 2018                                     SB 414
       
       
        
       By Senator Farmer
       
       
       
       
       
       34-00130-18                                            2018414__
    1                        A bill to be entitled                      
    2         An act relating to the use of credit information for
    3         motor vehicle insurance; amending s. 626.9741, F.S.;
    4         revising the purpose of the section; prohibiting
    5         insurers from requesting or using credit reports or
    6         credit scores of applicants or insureds for
    7         underwriting or rating purposes as to personal lines
    8         motor vehicle insurance; prohibiting insurers from
    9         making adverse decisions against such applicants or
   10         insureds based on the applicants’ or insureds’ credit
   11         reports or credit scores; conforming provisions to
   12         changes made by the act; providing an effective date.
   13          
   14  Be It Enacted by the Legislature of the State of Florida:
   15  
   16         Section 1. Section 626.9741, Florida Statutes, is amended
   17  to read:
   18         626.9741 Use of credit reports and credit scores by
   19  insurers.—
   20         (1) PURPOSE AND APPLICABILITY.—The purpose of this section
   21  is to prohibit the use of credit reports and credit scores by
   22  insurers for underwriting and rating purposes as to personal
   23  lines motor vehicle insurance and to regulate and limit the use
   24  of credit reports and credit scores by insurers for underwriting
   25  and rating purposes as to personal lines residential insurance.
   26  This section applies only to personal lines motor vehicle
   27  insurance and personal lines residential insurance, which
   28  includes homeowners, mobile home owners’ dwelling, tenants,
   29  condominium unit owners, cooperative unit owners, and similar
   30  types of insurance.
   31         (2) DEFINITIONS.—As used in this section, the term:
   32         (a) “Adverse decision” means a decision to refuse to issue
   33  or renew a policy of insurance; to issue a policy with
   34  exclusions or restrictions; to increase the rates or premium
   35  charged for a policy of insurance; to place an insured or
   36  applicant in a rating tier that does not have the lowest
   37  available rates for which that insured or applicant is otherwise
   38  eligible; or to place an applicant or insured with a company
   39  operating under common management, control, or ownership which
   40  does not offer the lowest rates available, within the affiliate
   41  group of insurance companies, for which that insured or
   42  applicant is otherwise eligible.
   43         (b) “Credit report” means any written, oral, or other
   44  communication of any information by a consumer reporting agency,
   45  as defined in the federal Fair Credit Reporting Act, 15 U.S.C.
   46  ss. 1681 et seq., bearing on a consumer’s credit worthiness,
   47  credit standing, or credit capacity, which is used or expected
   48  to be used or collected as a factor to establish a person’s
   49  eligibility for credit or insurance, or any other purpose
   50  authorized pursuant to the applicable provision of such federal
   51  act. A credit score alone, as calculated by a credit reporting
   52  agency or by or for the insurer, may not be considered a credit
   53  report.
   54         (c) “Credit score” means a score, grade, or value that is
   55  derived by using any or all data from a credit report in any
   56  type of model, method, or program, whether electronically, in an
   57  algorithm, computer software or program, or any other process,
   58  for the purpose of grading or ranking credit report data.
   59         (d) “Tier” means a category within a single insurer into
   60  which insureds with substantially similar risk, exposure, or
   61  expense factors are placed for purposes of determining rate or
   62  premium.
   63         (3) PERSONAL LINES MOTOR VEHICLE INSURANCE.—As to personal
   64  lines motor vehicle insurance, an insurer may not request or use
   65  a credit report or credit score of any applicant or insured for
   66  underwriting or rating purposes or make an adverse decision
   67  against an applicant or insured based, in whole or in part, on
   68  his or her credit report or credit score.
   69         (4)(3)PERSONAL LINES RESIDENTIAL INSURANCE.—
   70         (a)As to personal lines residential insurance, an insurer
   71  must inform an applicant or insured, in the same medium as the
   72  application is taken, that a credit report or score is being
   73  requested for underwriting or rating purposes. An insurer that
   74  makes an adverse decision based, in whole or in part, upon a
   75  credit report must provide at no charge, a copy of the credit
   76  report to the applicant or insured or provide the applicant or
   77  insured with the name, address, and telephone number of the
   78  consumer reporting agency from which the insured or applicant
   79  may obtain the credit report. The insurer must provide
   80  notification to the consumer explaining the reasons for the
   81  adverse decision. The reasons must be provided in sufficiently
   82  clear and specific language so that a person can identify the
   83  basis for the insurer’s adverse decision. Such notification
   84  shall include a description of the four primary reasons, or such
   85  fewer number as existed, which were the primary influences of
   86  the adverse decision. The use of generalized terms such as “poor
   87  credit history,” “poor credit rating,” or “poor insurance score”
   88  does not meet the explanation requirements of this paragraph
   89  subsection. A credit score may not be used in underwriting or
   90  rating insurance unless the scoring process produces information
   91  in sufficient detail to permit compliance with the requirements
   92  of this paragraph subsection. It shall not be deemed an adverse
   93  decision if, due to the insured’s credit report or credit score,
   94  the insured continues to receive a less favorable rate or
   95  placement in a less favorable tier or company at the time of
   96  renewal except for renewals or reunderwriting required by this
   97  subsection section.
   98         (b)1.(4)(a) An insurer may not request a credit report or
   99  score based upon the race, color, religion, marital status, age,
  100  gender, income, national origin, or place of residence of the
  101  applicant or insured.
  102         2.(b) An insurer may not make an adverse decision solely
  103  because of information contained in a credit report or score
  104  without consideration of any other underwriting or rating
  105  factor.
  106         3.(c) An insurer may not make an adverse decision or use a
  107  credit score that could lead to such a decision if based, in
  108  whole or in part, on:
  109         a.1. The absence of, or an insufficient, credit history, in
  110  which instance the insurer shall:
  111         (I)a. Treat the consumer as otherwise approved by the
  112  Office of Insurance Regulation if the insurer presents
  113  information that such an absence or inability is related to the
  114  risk for the insurer;
  115         (II)b. Treat the consumer as if the applicant or insured
  116  had neutral credit information, as defined by the insurer;
  117         (III)c. Exclude the use of credit information as a factor
  118  and use only other underwriting criteria;
  119         b.2. Collection accounts with a medical industry code, if
  120  so identified on the consumer’s credit report;
  121         c.3. Place of residence; or
  122         d.4. Any other circumstance that the Financial Services
  123  Commission determines, by rule, lacks sufficient statistical
  124  correlation and actuarial justification as a predictor of
  125  insurance risk.
  126         4.(d) An insurer may use the number of credit inquiries
  127  requested or made regarding the applicant or insured except for:
  128         a.1. Credit inquiries not initiated by the consumer or
  129  inquiries requested by the consumer for his or her own credit
  130  information.
  131         b.2. Inquiries relating to insurance coverage, if so
  132  identified on a consumer’s credit report.
  133         c.3. Collection accounts with a medical industry code, if
  134  so identified on the consumer’s credit report.
  135         d.4. Multiple lender inquiries, if coded by the consumer
  136  reporting agency on the consumer’s credit report as being from
  137  the home mortgage industry and made within 30 days of one
  138  another, unless only one inquiry is considered.
  139         e.5. Multiple lender inquiries, if coded by the consumer
  140  reporting agency on the consumer’s credit report as being from
  141  the automobile lending industry and made within 30 days of one
  142  another, unless only one inquiry is considered.
  143         5.(e) An insurer must, upon the request of an applicant or
  144  insured, provide a means of appeal for an applicant or insured
  145  whose credit report or credit score is unduly influenced by a
  146  dissolution of marriage, the death of a spouse, or temporary
  147  loss of employment. The insurer must complete its review within
  148  10 business days after the request by the applicant or insured
  149  and receipt of reasonable documentation requested by the
  150  insurer, and, if the insurer determines that the credit report
  151  or credit score was unduly influenced by any of such factors,
  152  the insurer shall treat the applicant or insured as if the
  153  applicant or insured had neutral credit information or shall
  154  exclude the credit information, as defined by the insurer,
  155  whichever is more favorable to the applicant or insured. An
  156  insurer shall not be considered out of compliance with its
  157  underwriting rules or rates or forms filed with the Office of
  158  Insurance Regulation or out of compliance with any other state
  159  law or rule as a result of granting any exceptions pursuant to
  160  this paragraph subsection.
  161         (c)(5) A rate filing that uses credit reports or credit
  162  scores must comply with the requirements of s. 627.062 or s.
  163  627.0651 to ensure that rates are not excessive, inadequate, or
  164  unfairly discriminatory.
  165         (d)(6) An insurer that requests or uses credit reports and
  166  credit scoring in its underwriting and rating methods shall
  167  maintain and adhere to established written procedures that
  168  reflect the restrictions set forth in the federal Fair Credit
  169  Reporting Act, this subsection section, and all rules related
  170  thereto.
  171         (e)1.(7)(a) An insurer shall establish procedures to review
  172  the credit history of an insured who was adversely affected by
  173  the use of the insured’s credit history at the initial rating of
  174  the policy, or at a subsequent renewal thereof. This review must
  175  be performed at a minimum of once every 2 years or at the
  176  request of the insured, whichever is sooner, and the insurer
  177  shall adjust the premium of the insured to reflect any
  178  improvement in the credit history. The procedures must provide
  179  that, with respect to existing policyholders, the review of a
  180  credit report will not be used by the insurer to cancel, refuse
  181  to renew, or require a change in the method of payment or
  182  payment plan.
  183         2.(b) However, as an alternative to the requirements of
  184  subparagraph 1. paragraph (a), an insurer that used a credit
  185  report or credit score for an insured upon inception of a
  186  policy, who will not use a credit report or score for
  187  reunderwriting, shall reevaluate the insured within the first 3
  188  years after inception, based on other allowable underwriting or
  189  rating factors, excluding credit information if the insurer does
  190  not increase the rates or premium charged to the insured based
  191  on the exclusion of credit reports or credit scores.
  192         (5)(8)RULES.—The commission may adopt rules to administer
  193  this section. The rules may include, but need not be limited to:
  194         (a) Information that must be included in filings to
  195  demonstrate compliance with paragraph (4)(a) subsection (3).
  196         (b) Statistical detail that insurers using credit reports
  197  or scores under paragraph (4)(c) subsection (5) must retain and
  198  report annually to the Office of Insurance Regulation.
  199         (c) Standards that ensure that rates or premiums associated
  200  with the use of a credit report or score are not unfairly
  201  discriminatory, based upon race, color, religion, marital
  202  status, age, gender, income, national origin, or place of
  203  residence.
  204         (d) Standards for review of models, methods, programs, or
  205  any other process by which to grade or rank credit report data
  206  and which may produce credit scores in order to ensure that the
  207  insurer demonstrates that such grading, ranking, or scoring is
  208  valid in predicting insurance risk of an applicant or insured.
  209         Section 2. This act shall take effect July 1, 2018.