Use of Credit Information in Insurance 2015 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 corelation 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 17 states and Puerto Rico addressed legislation regarding the use of credit information in insurance in the 2015 legislative session. Virginia adopted a resolution requesting the Bureau of Insurance to study the use by insurers of an insured's or applicant's credit information in connection with underwriting motor vehicle insurance policies.

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State Bill Number Bill Summary
Credit Information in Insurance 2015 Legislation
Alabama

None

 

Alaska

None

 
Arizona

None

 

Arkansas

None

 

California

None

 

Colorado

None

 

Connecticut

H.B. 6161

Failed Joint Favorable deadline 3/19/16

Prohibits insurance companies from using an applicant's or insured's credit history as a factor in underwriting or rating private passenger nonfleet automobile insurance policies.

Connecticut

H.B. 6866

Failed Joint Favorable deadline 3/19/16

Limits the underwriting or rating of private passenger nonfleet automobile insurance policies issued or renewed on or after Oct. 1, 2015, to an applicant's or insured's driving history, the number of miles driven annually and years of driving experience, and increases the motor vehicle minimum amount of proof of financial responsibility for damage to property to $25,000.

Delaware

None

 

District of Columbia

None

 
Florida

None

 

Georgia

None

 

Guam Not available  
Hawaii

None

 

Idaho None  
Illinois

None

 

Indiana

H.B. 1048

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

H.B. 487

Creates a new section of Subtitle 13 of KRS Chapter 304 to prohibit a motor vehicle insurer that uses credit ratings or scores for underwriting purposes to use credit information for persons aged 65 years and older if there will be an increase in premium for the insured.

Louisiana

None

 

Maine

None

 

Maryland

S.B. 749

Prohibits an insurer, with respect to private passenger motor vehicle insurance, from refusing to underwrite, canceling, refusing to renew, rating a risk, or increasing a renewal premium based, in whole or in part, on the marital status or employment or occupation of or education level attained by the insured or applicant; repeals specified provisions of law authorizing an insurer, under specified circumstances, to use the credit history of an applicant to rate a new policy of private passenger motor vehicle insurance; etc.

Massachusetts

None

 

Michigan

H.B. 4117

Prohibits insurance rates based on credit history, education, occupation, or residency.

Michigan

H.B. 4127

Prohibits use of credit score to determine insurance premium.

Minnesota

H.F. 330

S.F. 812

Prohibits the use of consumer credit scores or history by insurers in underwriting automobile insurance policies.

Minnesota

H.F. 356

Prohibits the use of consumer credit scores or history by insurers in underwriting automobile insurance policies.

Minnesota

H.F. 1958

S.F. 1944

Relates to insurance; modifies the limitations on the use of credit information.

Mississippi

S.B. 2731

Died in committee 2/3/15

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. 214

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 Jan. 1, 2016.

Montana

S.B. 208

Missed deadline for general bill transmittal 2/27/15

Prohibits the use of credit information in writing personal insurance.

Nebraska

None

 

Nevada

None

 

New Hampshire

None

 

New Jersey

None

 

New Mexico

None

 

New York

A.B. 901

Prohibits insurers from using credit information as the sole basis for charging an increased premium when underwriting or rating a new policy.

New York

A.B. 2881

Directs the superintendent of financial services to promulgate rules and regulations limiting the use of credit scores to determine automobile insurance premiums.

New York

A.B. 3312

Requires insurers to display certain underwriting information on the declarations page to their homeowners and dwelling fire personal lines policies.

New York

S.B. 1587

Directs the superintendent of financial services to promulgate rules and regulations limiting the use of credit scores to determine automobile insurance premiums.

North Carolina

None

 

North Dakota None  
N. Mariana Islands Not available  
Ohio

S.B. 64

Amends §3901.21 of the Revised Code to prohibit an insurer's use of a credit score, credit history, or credit report in fixing a premium rate for, or the terms and conditions of, an insurance policy, or in determining whether to issue, continue, or renew an insurance policy.

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

H.B. 6010

This bill prohibits insurers from using credit ratings to underwrite or rate risks for casualty insurance.

Rhode Island

S.B. 734

This bill prohibits insurers from using credit ratings to underwrite or rate risks for casualty insurance.

South Carolina

S.B. 81

Amends §38-77-122, relating to the issuance of automobile insurance coverage and the amount of automobile insurance premiums, to provide that insurers may not use a numerical credit-based insurance score or other credit rating as a basis for determining coverage or the amount of a premium, and amends §38-77-123, relating to renewals of automobile insurance policies, to provide that insurers may not use a numerical credit-based insurance score or other credit rating as a basis for determining whether to renew a policy for automobile insurance.

South Dakota None  
Tennessee

None

 

Texas

S.B. 79

Relates to prohibition of the use of credit scoring in underwriting and rating certain personal lines of insurance coverage.

Utah

None

 

Vermont

H.B. 364

This bill proposes to prohibit an insurer from considering an insured’s credit history when underwriting motor vehicle insurance.

Virginia

H.J.R. 594

Adopted 2/25/15

Requests the Bureau of Insurance to study the use by insurers of an insured's or applicant's credit information in connection with underwriting motor vehicle insurance policies.

Virgin Islands Not available  
Washington

None

 

West Virginia

H.B. 2051

Amends and reenacts §33-17A-4 and §33-17A-6 of the Code of West Virginia, 1931, as amended, all relating 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.

West Virginia

H.B. 2063

Amends and reenacts §33-20-5 of the Code of West Virginia, 1931, as amended, relating to insurance generally; and prohibiting the use of a credit score in casualty insurance rate filings.

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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