Text: HF491            Text: HF493
Complete Bill History


House File 492

HOUSE FILE BY FORD Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act prohibiting the use of credit information for underwriting 2 or rating risks for personal insurance and providing penalties 3 and effective and applicability dates. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2590HH 83 6 av/rj/14 PAG LIN 1 1 Section 1. Section 507B.4, Code 2009, is amended by adding 1 2 the following new subsection: 1 3 NEW SUBSECTION. 19. USE OF CREDIT INFORMATION. Any 1 4 violation of section 515.103. 1 5 Sec. 2. Section 515.103, subsections 1 and 2, Code 2009, 1 6 are amended to read as follows: 1 7 1. DEFINITIONS. As used in this section unless the 1 8 context otherwise requires: 1 9 a. "Adverse action" means a denial of issuance, 1 10 cancellation, or refusal to renew, an increase in any charge 1 11 for, or a reduction or other unfavorable change in the terms 1 12 of coverage or amount of any personal insurance existing or 1 13 applied for, or in connection with the underwriting of 1 14 personal insurance. 1 15 b. "Affiliate" means any company that controls, is 1 16 controlled by, or is under common control with another 1 17 company. 1 18 c. b. "Applicant" means an individual who has applied to 1 19 be covered by a personal insurance policy with an insurer. 1 20 d. c. "Consumer" means an insured whose credit 1 21 information is used or whose insurance score is calculated in 1 22 the underwriting or rating of a personal insurance policy or 1 23 an applicant for such a personal insurance policy. 1 24 e. d. "Consumer reporting agency" means any person that, 1 25 for monetary fees, dues, or on a cooperative nonprofit basis, 1 26 regularly engages in whole or in part in the practice of 1 27 assembling or evaluating consumer credit information or other 1 28 information concerning consumers for the purpose of furnishing 1 29 consumer credit reports to third parties. 1 30 f. e. "Credit information" means any information related 1 31 to credit that is contained in or derived from a credit 1 32 report, or provided in an application for personal insurance. 1 33 Information that is not related to credit shall not be 1 34 considered "credit information" regardless of whether the 1 35 information is contained in or derived from a credit report or 2 1 an application for credit or is used to calculate an insurance 2 2 score. 2 3 g. f. "Credit report" means any written, oral, or other 2 4 communication of information by a consumer reporting agency 2 5 that relates to a consumer's creditworthiness, credit 2 6 standing, or credit capacity and that is used or expected to 2 7 be used or is collected, in whole or in part, for the purpose 2 8 of serving as a factor in determining personal insurance 2 9 premiums, eligibility for personal insurance coverage, or tier 2 10 placement. 2 11 h. g. "Insurance score" means a number or rating that is 2 12 derived from an algorithm, computer application, model, or 2 13 other process that is based in whole or in part on credit 2 14 information for the purposes of predicting the future 2 15 insurance loss exposure of a consumer. 2 16 i. h. "Insured" means an individual who is covered by a 2 17 personal insurance policy. 2 18 j. i. "Personal insurance" means personal insurance and 2 19 not commercial insurance and is limited to private passenger 2 20 automobile, homeowners, farm owners, personal farm liability, 2 21 motorcycle, mobile home owners, noncommercial dwelling fire, 2 22 boat, personal watercraft, snowmobile, and recreational 2 23 vehicle insurance policies, that are individually underwritten 2 24 for personal, family, farm, or household use. No other type 2 25 of insurance is included as personal insurance for the 2 26 purposes of this section. 2 27 2. USE OF CREDIT INFORMATION == PROHIBITED. An insurer 2 28 authorized to do business in Iowa that uses shall not use 2 29 credit information to underwrite or rate risks for a policy of 2 30 personal insurance shall not do including but not limited to 2 31 doing any of the following: 2 32 a. Use Using an insurance score that is calculated using 2 33 income, gender, address, zip code, ethnic group, religion, 2 34 marital status, race, or nationality of a consumer as a 2 35 factor. 3 1 b. Deny Denying issuance, cancel canceling, or refuse 3 2 refusing to renew a policy of personal insurance solely based 3 3 on the basis any consideration of credit information, without 3 4 consideration of any other applicable underwriting factors 3 5 independent of credit information that are not otherwise 3 6 prohibited under paragraph "a". 3 7 c. Base Basing a consumer's renewal rates for personal 3 8 insurance solely on the basis any consideration of credit 3 9 information, without consideration of any other applicable 3 10 underwriting factors independent of credit information that 3 11 are not otherwise prohibited under paragraph "a". 3 12 d. Take Taking adverse action against a consumer solely 3 13 because based on any consideration of the fact that the 3 14 consumer does not have a credit card account, without 3 15 consideration of any other applicable underwriting factors 3 16 independent of credit information that are not otherwise 3 17 prohibited under paragraph "a". 3 18 e. Consider Considering an absence of credit information 3 19 or an inability to calculate an insurance score in 3 20 underwriting or rating personal insurance unless the insurer 3 21 does one of the following:. 3 22 (1) Treats the consumer as if the consumer has neutral 3 23 credit information, as defined by the insurer. 3 24 (2) Excludes the use of credit information as an 3 25 underwriting factor and only uses other underwriting criteria. 3 26 f. Take Taking adverse action against a consumer based on 3 27 credit information, unless the insurer obtains and uses a 3 28 credit report issued or an insurance score calculated within 3 29 ninety days before the date a personal insurance policy is 3 30 first written or a renewal is issued. 3 31 g. Use credit information unless not later than every 3 32 thirty=six months following the last time that the insurer 3 33 obtained current credit information for the insured, the 3 34 insurer recalculates the insurance score or obtains an updated 3 35 credit report for the insured. Regardless of the requirements 4 1 of this paragraph: 4 2 (1) At annual renewal, upon the request of the consumer or 4 3 the consumer's agent, the insurer shall re=underwrite and 4 4 re=rate the personal insurance policy based upon a current 4 5 credit report or insurance score. An insurer is not required 4 6 to recalculate an insurance score or obtain a current credit 4 7 report more than once in a twelve=month period. 4 8 (2) The insurer shall have the discretion to obtain 4 9 current credit information for a consumer more frequently than 4 10 every thirty=six months, if consistent with the insurer's 4 11 underwriting guidelines. 4 12 (3) Notwithstanding subparagraph (1), an insurer is not 4 13 required to obtain current credit information for a consumer 4 14 if any of the following applies: 4 15 (a) The insurer is treating the consumer as otherwise 4 16 approved by the commissioner of insurance. 4 17 (b) The consumer is in the most favorably priced tier of 4 18 the insurer, within a group of affiliated insurers. However, 4 19 the insurer shall have the discretion to obtain current credit 4 20 information, if consistent with the insurer's underwriting 4 21 guidelines. 4 22 (c) Credit information was not used for underwriting or 4 23 rating the insured when the personal insurance policy was 4 24 initially written. However, the insurer shall have the 4 25 discretion to use current credit information for underwriting 4 26 or rating the insured upon renewal of the policy, if 4 27 consistent with the insurer's underwriting guidelines. 4 28 (d) The insurer reevaluates the insured beginning no later 4 29 than thirty=six months after the personal insurance policy was 4 30 initially written and thereafter, based on other underwriting 4 31 or rating factors, excluding credit information. 4 32 h. g. Use Using any of the following as a negative factor 4 33 in any insurance scoring methodology or in reviewing credit 4 34 information used for the purpose of underwriting or rating a 4 35 personal insurance policy: 5 1 (1) Credit inquiries not initiated by the consumer or 5 2 inquiries requested by the consumer for the consumer's own 5 3 credit information. 5 4 (2) Inquiries relating to insurance coverage, if so 5 5 identified on a consumer's credit report. 5 6 (3) Collection accounts with a medical industry code, if 5 7 so identified on a consumer's credit report. 5 8 (4) Multiple lender inquiries, if coded by a consumer 5 9 reporting agency on the consumer's credit report as being from 5 10 the home mortgage industry and made within thirty days of one 5 11 another, unless only one inquiry is considered. 5 12 (5) Multiple lender inquiries, if coded by a consumer 5 13 reporting agency on the consumer's credit report as being from 5 14 the automobile lending industry and made within thirty days of 5 15 one another, unless only one inquiry is considered. 5 16 Sec. 3. Section 515.103, subsections 3 through 8, Code 5 17 2009, are amended by striking the subsections. 5 18 Sec. 4. Section 515.103, subsection 9, Code 2009, is 5 19 amended by striking the subsection and inserting in lieu 5 20 thereof the following: 5 21 9. VIOLATIONS. A violation of this section is an unfair 5 22 insurance practice as provided in chapter 507B. 5 23 Sec. 5. Section 515.103, subsection 10, Code 2009, is 5 24 amended by striking the subsection. 5 25 Sec. 6. EFFECTIVE AND APPLICABILITY DATES. This Act takes 5 26 effect and is applicable to personal insurance contracts or 5 27 policies delivered, issued for delivery, continued, or renewed 5 28 in this state on or after October 1, 2009. 5 29 EXPLANATION 5 30 This bill amends Code section 515.103 to prohibit the use 5 31 of credit information by insurers for underwriting or rating 5 32 risks for personal insurance. Currently, the use of credit 5 33 information for such purposes is allowed under certain 5 34 circumstances. 5 35 Uses of credit information prohibited by the bill include 6 1 using an insurance score; denying issuance, canceling, or 6 2 refusing to renew a personal insurance policy based on any 6 3 consideration of credit information; basing a consumer's 6 4 insurance renewal rates on any consideration of credit 6 5 information; taking any adverse action against a consumer 6 6 based on any consideration of the fact that the consumer does 6 7 not have a credit card account; considering an absence of 6 8 credit information or an inability to calculate an insurance 6 9 score in underwriting or rating personal insurance; and taking 6 10 any adverse action against a consumer based on credit 6 11 information. For purposes of the bill, "adverse action" means 6 12 a denial of issuance, cancellation, or refusal to renew, an 6 13 increase in any charge for, or a reduction or other 6 14 unfavorable change in the terms of coverage or amount of any 6 15 personal insurance existing or applied for, or in connection 6 16 with, the underwriting of personal insurance. 6 17 The bill provides that a violation of Code section 515.103 6 18 is an unfair insurance practice as provided in Code chapter 6 19 507B and the proceedings, orders, and penalties contained in 6 20 Code chapter 507B are applicable to violations of the bill. 6 21 The bill takes effect and is applicable to personal 6 22 insurance contracts or policies delivered, issued for 6 23 delivery, continued, or renewed in this state on or after 6 24 October 1, 2009. 6 25 LSB 2590HH 83 6 26 av/rj/14.1
Text: HF491            Text: HF493 Complete Bill History