Bill Text: FL S0662 | 2010 | Regular Session | Introduced

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Bill Title: Insurance [CPSC]

Spectrum: Partisan Bill (Republican 3-0)

Status: (Failed) 2010-04-30 - Died in Committee on Banking and Insurance [S0662 Detail]

Download: Florida-2010-S0662-Introduced.html

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Florida Senate - 2010                                     SB 662 
 
By Senator Storms 
10-00145-10                                            2010662__ 
1                        A bill to be entitled 
2         An act relating to insurance; amending s. 626.9541, 
3         F.S.; prohibiting an insurer that issues motor vehicle 
4         insurance from using a rate, rating schedule, rating 
5         manual, or an underwriting rule that is not contained 
6         in a rating manual and is determined in whole or in 
7         part on the basis of certain characteristics of an 
8         insured; including the refusal to insure or continue 
9         to insure any individual or risk because of 
10         educational level, trade, business, occupation, 
11         profession, credit report, credit score, or certain 
12         forms of lawful employment among the list of 
13         activities constituting unfair methods of competition 
14         and unfair or deceptive acts; amending s. 626.9741, 
15         F.S.; prohibiting the use by insurers of credit 
16         reports and credit scores in making rating 
17         determinations; deleting provisions limiting and 
18         regulating the use of credit score by insurers when 
19         making rating determinations; deleting the definition 
20         of “adverse decision” and “tier”; deleting provisions 
21         authorizing the Financial Services Commission to adopt 
22         rules; providing an effective date. 
23 
24  Be It Enacted by the Legislature of the State of Florida: 
25 
26         Section 1. Paragraphs (o) and (x) of subsection (1) of 
27  section 626.9541, Florida Statutes, are amended to read: 
28         626.9541 Unfair methods of competition and unfair or 
29  deceptive acts or practices defined.— 
30         (1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE 
31  ACTS.—The following are defined as unfair methods of competition 
32  and unfair or deceptive acts or practices: 
33         (o) Illegal dealings in premiums; excess or reduced charges 
34  for insurance.— 
35         1. Knowingly collecting any sum as a premium or charge for 
36  insurance, which is not then provided, or is not in due course 
37  to be provided, subject to acceptance of the risk by the 
38  insurer, by an insurance policy issued by an insurer as 
39  permitted by this code. 
40         2. Knowingly collecting as a premium or charge for 
41  insurance any sum in excess of or less than the premium or 
42  charge applicable to such insurance, in accordance with the 
43  applicable classifications and rates as filed with and approved 
44  by the office, and as specified in the policy; or, in cases when 
45  classifications, premiums, or rates are not required by this 
46  code to be so filed and approved, premiums and charges collected 
47  from a Florida resident in excess of or less than those 
48  specified in the policy and as fixed by the insurer. This 
49  provision does shall not be deemed to prohibit the charging and 
50  collection, by surplus lines agents licensed under part VIII of 
51  this chapter, of the amount of applicable state and federal 
52  taxes, or fees as authorized by s. 626.916(4), in addition to 
53  the premium required by the insurer or the charging and 
54  collection, by licensed agents, of the exact amount of any 
55  discount or other such fee charged by a credit card facility in 
56  connection with the use of a credit card, as authorized by 
57  subparagraph (q)3., in addition to the premium required by the 
58  insurer. This subparagraph does shall not be construed to 
59  prohibit collection of a premium for a universal life or a 
60  variable or indeterminate value insurance policy made in 
61  accordance with the terms of the contract. 
62         3.a. Imposing or requesting an additional premium for a 
63  policy of motor vehicle liability, personal injury protection, 
64  medical payment, or collision insurance or any combination 
65  thereof or refusing to renew the policy solely because the 
66  insured was involved in a motor vehicle accident unless the 
67  insurer’s file contains information from which the insurer in 
68  good faith determines that the insured was substantially at 
69  fault in the accident. 
70         b. An insurer that which imposes and collects such a 
71  surcharge or which refuses to renew such policy shall, in 
72  conjunction with the notice of premium due or notice of 
73  nonrenewal, notify the named insured that he or she is entitled 
74  to reimbursement of such amount or renewal of the policy under 
75  the conditions listed below and will subsequently reimburse him 
76  or her or renew the policy, if the named insured demonstrates 
77  that the operator involved in the accident was: 
78         (I) Lawfully parked; 
79         (II) Reimbursed by, or on behalf of, a person responsible 
80  for the accident or has a judgment against such person; 
81         (III) Struck in the rear by another vehicle headed in the 
82  same direction and was not convicted of a moving traffic 
83  violation in connection with the accident; 
84         (IV) Hit by a “hit-and-run” driver, if the accident was 
85  reported to the proper authorities within 24 hours after 
86  discovering the accident; 
87         (V) Not convicted of a moving traffic violation in 
88  connection with the accident, but the operator of the other 
89  automobile involved in such accident was convicted of a moving 
90  traffic violation; 
91         (VI) Finally adjudicated not to be liable by a court of 
92  competent jurisdiction; 
93         (VII) In receipt of a traffic citation which was dismissed 
94  or nolle prossed; or 
95         (VIII) Not at fault as evidenced by a written statement 
96  from the insured establishing facts demonstrating lack of fault 
97  which are not rebutted by information in the insurer’s file from 
98  which the insurer in good faith determines that the insured was 
99  substantially at fault. 
100         c. In addition to the other provisions of this 
101  subparagraph, an insurer may not fail to renew a policy if the 
102  insured has had only one accident in which he or she was at 
103  fault within the current 3-year period. However, an insurer may 
104  nonrenew a policy for reasons other than accidents in accordance 
105  with s. 627.728. This subparagraph does not prohibit nonrenewal 
106  of a policy under which the insured has had three or more 
107  accidents, regardless of fault, during the most recent 3-year 
108  period. 
109         4. Imposing or requesting an additional premium for, or 
110  refusing to renew, a policy for motor vehicle insurance solely 
111  because the insured committed a noncriminal traffic infraction 
112  as described in s. 318.14 unless the infraction is: 
113         a. A second infraction committed within an 18-month period, 
114  or a third or subsequent infraction committed within a 36-month 
115  period. 
116         b. A violation of s. 316.183, when such violation is a 
117  result of exceeding the lawful speed limit by more than 15 miles 
118  per hour. 
119         5. Upon the request of the insured, the insurer and 
120  licensed agent shall supply to the insured the complete proof of 
121  fault or other criteria that which justifies the additional 
122  charge or cancellation. 
123         6. An No insurer may not shall impose or request an 
124  additional premium for motor vehicle insurance, cancel or refuse 
125  to issue a policy, or refuse to renew a policy because the 
126  insured or the applicant is a handicapped or physically disabled 
127  person, so long as such handicap or physical disability does not 
128  substantially impair such person’s mechanically assisted driving 
129  ability. 
130         7. An No insurer may not 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. An No insurer may not 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. An No insurer may not shall, with respect to premiums 
146  charged for motor vehicle insurance, unfairly discriminate 
147  solely on the basis of age, sex, marital status, or scholastic 
148  achievement. 
149         10. An insurer may not, with respect to premiums charged 
150  for motor vehicle insurance, use any rate, rating schedule, 
151  rating manual, or underwriting rule that is not contained in a 
152  rating manual and that is determined in whole or in part on the 
153  basis of any of the following as they relate to an insured: 
154         a. Educational level. 
155         b. Trade, business, occupation, profession, or any lawful 
156  form of employment that does not directly involve the use of one 
157  or more vehicles specifically insured or identified in the 
158  insurance policy. 
159         c. Credit report or credit score as defined in s. 626.9741. 
160         11.10. Imposing or requesting an additional premium for 
161  motor vehicle comprehensive or uninsured motorist coverage 
162  solely because the insured was involved in a motor vehicle 
163  accident or was convicted of a moving traffic violation. 
164         12.11. An No insurer may not shall cancel or issue a 
165  nonrenewal notice on any insurance policy or contract without 
166  complying with any applicable cancellation or nonrenewal 
167  provision required under the Florida Insurance Code. 
168         13.12. An No insurer may not shall impose or request an 
169  additional premium, cancel a policy, or issue a nonrenewal 
170  notice on any insurance policy or contract because of any 
171  traffic infraction when adjudication has been withheld and no 
172  points have been assessed pursuant to s. 318.14(9) and (10). 
173  However, this subparagraph does not apply to traffic infractions 
174  involving accidents in which the insurer has incurred a loss due 
175  to the fault of the insured. 
176         (x) Refusal to insure.—In addition to other provisions of 
177  this code, the refusal to insure, or continue to insure, any 
178  individual or risk because of the individual’s educational 
179  level, trade, business, occupation, profession, any form of 
180  lawful employment, or credit report or credit score as defined 
181  in s. 626.9741, or solely because of: 
182         1. Race, color, creed, marital status, gender sex, or 
183  national origin; 
184         2. The residence or, age, or lawful occupation of the 
185  individual or the location of the risk, unless there is a 
186  reasonable relationship between the residence or, age, or lawful 
187  occupation of the individual or the location of the risk and the 
188  coverage issued or to be issued; 
189         3. The insured’s or applicant’s failure to agree to place 
190  collateral business with any insurer, unless the coverage 
191  applied for would provide liability coverage which is excess 
192  over that provided in policies maintained on property or motor 
193  vehicles; 
194         4. The insured’s or applicant’s failure to purchase 
195  noninsurance services or commodities, including automobile 
196  services as defined in s. 624.124; 
197         5. The fact that the insured or applicant is a public 
198  official; or 
199         6. The fact that the insured or applicant had been 
200  previously refused insurance coverage by any insurer, when such 
201  refusal to insure or continue to insure for this reason occurs 
202  with such frequency as to indicate a general business practice. 
203         Section 2. Section 626.9741, Florida Statutes, is amended 
204  to read: 
205         626.9741 Use of credit reports and credit scores by 
206  insurers.—An insurer may not use credit reports or credit scores 
207  in making rating determinations. For purposes of this section, 
208  the term: 
209         (1) The purpose of this section is to regulate and limit 
210  the use of credit reports and credit scores by insurers for 
211  underwriting and rating purposes. This section applies only to 
212  personal lines motor vehicle insurance and personal lines 
213  residential insurance, which includes homeowners, mobile home 
214  owners’ dwelling, tenants, condominium unit owners, cooperative 
215  unit owners, and similar types of insurance. 
216         (2) As used in this section, the term: 
217         (a) “Adverse decision” means a decision to refuse to issue 
218  or renew a policy of insurance; to issue a policy with 
219  exclusions or restrictions; to increase the rates or premium 
220  charged for a policy of insurance; to place an insured or 
221  applicant in a rating tier that does not have the lowest 
222  available rates for which that insured or applicant is otherwise 
223  eligible; or to place an applicant or insured with a company 
224  operating under common management, control, or ownership which 
225  does not offer the lowest rates available, within the affiliate 
226  group of insurance companies, for which that insured or 
227  applicant is otherwise eligible. 
228         (1)(b) “Credit report” means any written, oral, or other 
229  communication of any information by a consumer reporting agency, 
230  as defined in the federal Fair Credit Reporting Act, 15 U.S.C. 
231  ss. 1681 et seq., bearing on a consumer’s credit worthiness, 
232  credit standing, or credit capacity, which is used or expected 
233  to be used or collected as a factor to establish a person’s 
234  eligibility for credit or insurance, or any other purpose 
235  authorized pursuant to the applicable provision of such federal 
236  act. A credit score alone, as calculated by a credit reporting 
237  agency or by or for the insurer, may not be considered a credit 
238  report. 
239         (2)(c) “Credit score” means a score, grade, or value that 
240  is derived by using any or all data from a credit report in any 
241  type of model, method, or program, whether electronically, in an 
242  algorithm, computer software or program, or any other process, 
243  for the purpose of grading or ranking credit report data. 
244         (d) “Tier” means a category within a single insurer into 
245  which insureds with substantially similar risk, exposure, or 
246  expense factors are placed for purposes of determining rate or 
247  premium. 
248         (3) An insurer must inform an applicant or insured, in the 
249  same medium as the application is taken, that a credit report or 
250  score is being requested for underwriting or rating purposes. An 
251  insurer that makes an adverse decision based, in whole or in 
252  part, upon a credit report must provide at no charge, a copy of 
253  the credit report to the applicant or insured or provide the 
254  applicant or insured with the name, address, and telephone 
255  number of the consumer reporting agency from which the insured 
256  or applicant may obtain the credit report. The insurer must 
257  provide notification to the consumer explaining the reasons for 
258  the adverse decision. The reasons must be provided in 
259  sufficiently clear and specific language so that a person can 
260  identify the basis for the insurer’s adverse decision. Such 
261  notification shall include a description of the four primary 
262  reasons, or such fewer number as existed, which were the primary 
263  influences of the adverse decision. The use of generalized terms 
264  such as “poor credit history,” “poor credit rating,” or “poor 
265  insurance score” does not meet the explanation requirements of 
266  this subsection. A credit score may not be used in underwriting 
267  or rating insurance unless the scoring process produces 
268  information in sufficient detail to permit compliance with the 
269  requirements of this subsection. It shall not be deemed an 
270  adverse decision if, due to the insured’s credit report or 
271  credit score, the insured continues to receive a less favorable 
272  rate or placement in a less favorable tier or company at the 
273  time of renewal except for renewals or reunderwriting required 
274  by this section. 
275         (4)(a) An insurer may not request a credit report or score 
276  based upon the race, color, religion, marital status, age, 
277  gender, income, national origin, or place of residence of the 
278  applicant or insured. 
279         (b) An insurer may not make an adverse decision solely 
280  because of information contained in a credit report or score 
281  without consideration of any other underwriting or rating 
282  factor. 
283         (c) An insurer may not make an adverse decision or use a 
284  credit score that could lead to such a decision if based, in 
285  whole or in part, on: 
286         1. The absence of, or an insufficient, credit history, in 
287  which instance the insurer shall: 
288         a. Treat the consumer as otherwise approved by the Office 
289  of Insurance Regulation if the insurer presents information that 
290  such an absence or inability is related to the risk for the 
291  insurer; 
292         b. Treat the consumer as if the applicant or insured had 
293  neutral credit information, as defined by the insurer; 
294         c. Exclude the use of credit information as a factor and 
295  use only other underwriting criteria; 
296         2. Collection accounts with a medical industry code, if so 
297  identified on the consumer’s credit report; 
298         3. Place of residence; or 
299         4. Any other circumstance that the Financial Services 
300  Commission determines, by rule, lacks sufficient statistical 
301  correlation and actuarial justification as a predictor of 
302  insurance risk. 
303         (d) An insurer may use the number of credit inquiries 
304  requested or made regarding the applicant or insured except for: 
305         1. Credit inquiries not initiated by the consumer or 
306  inquiries requested by the consumer for his or her own credit 
307  information. 
308         2. Inquiries relating to insurance coverage, if so 
309  identified on a consumer’s credit report. 
310         3. Collection accounts with a medical industry code, if so 
311  identified on the consumer’s credit report. 
312         4. Multiple lender inquiries, if coded by the consumer 
313  reporting agency on the consumer’s credit report as being from 
314  the home mortgage industry and made within 30 days of one 
315  another, unless only one inquiry is considered. 
316         5. Multiple lender inquiries, if coded by the consumer 
317  reporting agency on the consumer’s credit report as being from 
318  the automobile lending industry and made within 30 days of one 
319  another, unless only one inquiry is considered. 
320         (e) An insurer must, upon the request of an applicant or 
321  insured, provide a means of appeal for an applicant or insured 
322  whose credit report or credit score is unduly influenced by a 
323  dissolution of marriage, the death of a spouse, or temporary 
324  loss of employment. The insurer must complete its review within 
325  10 business days after the request by the applicant or insured 
326  and receipt of reasonable documentation requested by the 
327  insurer, and, if the insurer determines that the credit report 
328  or credit score was unduly influenced by any of such factors, 
329  the insurer shall treat the applicant or insured as if the 
330  applicant or insured had neutral credit information or shall 
331  exclude the credit information, as defined by the insurer, 
332  whichever is more favorable to the applicant or insured. An 
333  insurer shall not be considered out of compliance with its 
334  underwriting rules or rates or forms filed with the Office of 
335  Insurance Regulation or out of compliance with any other state 
336  law or rule as a result of granting any exceptions pursuant to 
337  this subsection. 
338         (5) A rate filing that uses credit reports or credit scores 
339  must comply with the requirements of s. 627.062 or s. 627.0651 
340  to ensure that rates are not excessive, inadequate, or unfairly 
341  discriminatory. 
342         (6) An insurer that requests or uses credit reports and 
343  credit scoring in its underwriting and rating methods shall 
344  maintain and adhere to established written procedures that 
345  reflect the restrictions set forth in the federal Fair Credit 
346  Reporting Act, this section, and all rules related thereto. 
347         (7)(a) An insurer shall establish procedures to review the 
348  credit history of an insured who was adversely affected by the 
349  use of the insured’s credit history at the initial rating of the 
350  policy, or at a subsequent renewal thereof. This review must be 
351  performed at a minimum of once every 2 years or at the request 
352  of the insured, whichever is sooner, and the insurer shall 
353  adjust the premium of the insured to reflect any improvement in 
354  the credit history. The procedures must provide that, with 
355  respect to existing policyholders, the review of a credit report 
356  will not be used by the insurer to cancel, refuse to renew, or 
357  require a change in the method of payment or payment plan. 
358         (b) However, as an alternative to the requirements of 
359  paragraph (a), an insurer that used a credit report or credit 
360  score for an insured upon inception of a policy, who will not 
361  use a credit report or score for reunderwriting, shall 
362  reevaluate the insured within the first 3 years after inception, 
363  based on other allowable underwriting or rating factors, 
364  excluding credit information if the insurer does not increase 
365  the rates or premium charged to the insured based on the 
366  exclusion of credit reports or credit scores. 
367         (8) The commission may adopt rules to administer this 
368  section. The rules may include, but need not be limited to: 
369         (a) Information that must be included in filings to 
370  demonstrate compliance with subsection (3). 
371         (b) Statistical detail that insurers using credit reports 
372  or scores under subsection (5) must retain and report annually 
373  to the Office of Insurance Regulation. 
374         (c) Standards that ensure that rates or premiums associated 
375  with the use of a credit report or score are not unfairly 
376  discriminatory, based upon race, color, religion, marital 
377  status, age, gender, income, national origin, or place of 
378  residence. 
379         (d) Standards for review of models, methods, programs, or 
380  any other process by which to grade or rank credit report data 
381  and which may produce credit scores in order to ensure that the 
382  insurer demonstrates that such grading, ranking, or scoring is 
383  valid in predicting insurance risk of an applicant or insured. 
384         Section 3. This act shall take effect July 1, 2010.