Use of Credit Information in Insurance 2014 Legislation

Heather Morton 4/26/2016

Insurance FormInsurance companies have been using credit information to determine a consumer's level of risk before selling or renewing auto, home or renter insurance policies.

The insurance companies believe a direct correlation exists between a consumer's financial stability and risk of filing an insurance claim.  Insurers may use a consumer's credit score as one factor in assigning premiums, deciding whether to accept or decline coverage or in the decision to place a consumer with a nonstandard (generally higher priced) insurer.

Legislators in 11 states and Puerto Rico addressed legislation regarding the use of credit information in insurance in the 2014 legislative session. Florida enacted legislation providing that a claim for residential property insurance cannot be denied based on certain credit information.

The box allows you to conduct a full text search or type the state name.

State Bill Number Bill Summary
Credit Information in Insurance 2014 Legislation
Alabama

None

 

Alaska

None

 
Arizona

None

 

Arkansas

None

 

California

None

 

Colorado

None

 

Connecticut

None

 

Delaware

None

 

District of Columbia

None

 
Florida

H.B. 743

Substituted by S.B. 708 4/29/14

Provides that a claim for residential property insurance cannot be denied based on certain credit information; provides that a policy or contract may not be cancelled based on certain credit information; revises rule requirements relating to property insurance mediation program administered by DFS; provides grounds for challenging umpire's impartiality in estimating amount of property loss; redefines term "neutral evaluator"; specifies grounds for denying, suspending, or revoking approval of neutral evaluator; establishes a Homeowner Claims Bill of Rights for personal lines residential property insurance policyholders; provides that such bill of rights does not provide cause of action; defines terms; provides requirements for emergency mitigation repair agreements; requires emergency mitigation contractor to be appropriately certified or to possess contracting license.

Florida

H.B. 759

Died in committee 5/2/14

Relates to insurance claims; adds mediators and neutral evaluators to list of individuals or entities that DFS or OIR may investigate for alleged improper conduct; provides that a claim for residential property insurance cannot be denied based on certain credit information; provides that a policy or contract be cancelled based on certain credit information; provides for assignment of property insurance policy benefits; specifies requirements for assignment of post-loss benefits in valid agreement for services; revises rule requirements relating to property insurance mediation program; provides grounds for challenging an umpire's impartiality; redefines term "neutral evaluator"; specifies grounds for denying, suspending, or revoking approval of neutral evaluator; establishes a Claims Bill of Rights for residential property insurance policyholders; provides that such bill of rights does not provide cause of action; provides requirements for emergency mitigation repair agreements; revises qualifications for mediators of personal injury claims; provides grounds for denying, suspending, or revoking application or approval of mediator.

Florida

S.B. 708

Signed by governor 6/13/14, Chapter 86

Provides that a claim for residential property insurance cannot be denied based on certain credit information; provides that a policy or contract may not be cancelled based on certain credit information; provides grounds for challenging an umpire’s impartiality in estimating the amount of a property loss; establishes a Homeowner Claims Bill of Rights for residential property insurance policyholders.

Georgia

H.R. 1104

This resolution discourages the use of credit scores for employment and insurance.

Guam Not available  
Hawaii

None

 

Idaho None  
Illinois

None

 

Indiana

H.B. 1077

Generally prohibits an insurer from considering credit information in connection with the renewal of a personal insurance policy. Provides that: (1) if an insurer uses a credit report or insurance score to re-underwrite or re-rate a personal insurance policy at the request of the insured or the insured's agent at annual renewal; and (2) if the result is that the insured is eligible to be placed in a less favorably priced tier; the insurer is required to maintain the insured in the insured's current tier. Removes a disclosure exemption.

Iowa

None

 

Kansas None

 

Kentucky

None

 

Louisiana

H.B. 1163

Requires an insurer who obtains a consumer's credit report to provide a copy of the credit report to the applicant.

Maine

None

 

Maryland

None

 

Massachusetts

None

 

Michigan None

 

Minnesota

None

 

Mississippi

S.B. 2846

Died in committee 2/4/14

Prohibits insurers from using information regarding a consumer's creditworthiness, credit standing or credit capacity for the purpose of determining rates for insurance or eligibility for coverage.

Missouri

H.B. 1749

This bill changes the laws regarding the use of credit information when underwriting insurance contracts. In its main provisions, the bill: (1) Revises the definition of "adverse action" to have the same meaning as in the federal Fair Credit Reporting Act including cancellation, denial, and nonrenewal of personal insurance coverage and creating any reduction or adverse or unfavorable change in the terms of coverage, including charging higher premiums due to a person's credit history or insurance credit score; (2) Revises the definition of "contract" as any insurance policy issued in this state other than a policy of mortgage insurance or commercial insurance; (3) Prohibits an insurer from taking an adverse action against a new applicant based on an inability to calculate an insurance score in underwriting or rating personal insurance without consideration of another noncredit-related underwriting factor or based on information that is the subject of a written dispute between the applicant and a consumer reporting agency; and (4) Prohibits an insurer from using a credit report or insurance credit score as a factor in underwriting or taking any adverse action based on a credit report or insurance credit score against a person currently insured under an existing insurance contract with the insurer. The provisions of the bill apply to all contracts entered into on or after January 1, 2015.

Montana

None

 

Nebraska

None

 

Nevada

No regular 2014 session

 

New Hampshire

None

 

New Jersey

S.B. 1126

This bill requires the Department of Banking and Insurance to conduct an investigation of practices of the automobile insurance industry in regard to increases in automobile insurance premiums for drivers who have had motor vehicle driver’s license suspensions for any reason – either driving related or not. Further, the commissioner of the department is to investigate the use of credit ratings and addresses in determining premiums for drivers. In performing its investigation, the department is to determine whether increases are justified for certain offenses not related to driving including credit ratings.

New Mexico

None

 

New York

A.B. 8380

Provides that no insurer shall take into consideration or include in any calculation or formula for the making of homeowners' insurance rates, the credit history of any person, nor shall any person be denied homeowners' insurance as a result of such credit history.

New York

S.B. 6274

Prohibits automobile insurers from considering an applicant's or insured's credit history, credit rating or lack of a credit history as a factor in the underwriting, rating, premiums, or the decision of issuance or renewal of any automobile insurance policy to such applicant or insured.

North Carolina

None

 

North Dakota No regular 2014 session  
N. Mariana Islands Not available  
Ohio

None

 

Oklahoma

None

 

Oregon

None

 

Pennsylvania

None

 

Puerto Rico

S.B. 41

Amends Law 77 of 1957 to prohibit the use of credit information for granting an insurance policy; provides for insurers and insurance agents to deliver a detailed quote of the policy that is being offered to prospective insured at the time of the offer.

Rhode Island

None

 

South Carolina

H.B. 4882

Amends §38-1-20, relating to definitions concerning insurance law, so as to add a definition for "credit score"; amends §38-73-740, relating to records and in determining classifications and rates of applicants for automobile insurance which must be maintained by automobile insurers for at least three years, so as to delete references to investigative and credit reports; and amends §§38-77-122 and 38-77-123, as amended, relating to the prohibition on automobile insurers and agents from refusing to issue, or renew, automobile insurance policies due to certain factors, factors prohibited in determining premium rates, requirements for cancellation, and penalties for violations, so as to prohibit the use of credit score as a factor in refusing to issue or renew a policy of automobile insurance and to prohibit the use of credit in determining automobile insurance policy premium rates.

South Dakota None  
Tennessee

None

 

Texas

No regular 2014 session

 

Utah

None

 

Vermont None  
Virginia

H.B. 1139

Prohibits insurers from setting rates for motor vehicle insurance on the basis of a person's credit history or credit score.

Virgin Islands Not available  
Washington

None

 

West Virginia

H.B. 2078

Prohibits the use of a credit score in casualty insurance rate filings.

West Virginia

H.B. 2282

Prohibits the use of a person's credit history for insurance purposes.

West Virginia

H.B. 3010

Relates to the use of credit information in connection with the declination and termination of property insurance and expanding the information required to be provided by an insurer in the notice of declination or termination to an insured or applicant.

Wisconsin

None

 

Wyoming None  

 

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Heather Morton is a program principal in NCSL's Fiscal Affairs Program. She covers financial services, alcohol production and sales, and medical malpractice issues for NCSL

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