Use of Credit Information in Insurance 2016 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. nsurers 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 16 states, the District of Columbia and Puerto Rico addressed legislation regarding the use of credit information in insurance in the 2016 legislative session. 

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

State Bill Number Bill Summary
Credit Information in Insurance 2016 Legislation
Alabama

None

 

Alaska

H.B. 367

Withdrawn by sponsor 4/17/16

Prohibits an insurer from using a consumer's credit history in underwriting, rating, or determining premiums or eligibility for insurance coverage.

Alaska

S.B. 127

Passed both houses 4/17/16

Provides for an exception to consideration by an insurer of credit history or insurance score.

Arizona

None

 

Arkansas

None

 

California

None

 

Colorado

None

 

Connecticut

None

 

Delaware

None

 

District of Columbia

B21-612

This bill prohibits the use of credit history in decisions by insurers about whether to underwrite a policy, cancel a policy, refuse to renew a policy or increase the premium for a renewal policy. It limits the use of the absence of credit history to raise premiums and prohibits the use of credit history based on medical bills.

Florida

None

 

Georgia

None

 

Guam Not available  
Hawaii

None

 

Idaho None  
Illinois

S.B. 2208

Amends the Use of Credit Information in Personal Insurance Act. Provides that an insurer authorized to do business in the state shall not use a consumer's credit information or credit report to calculate an insurance score for private passenger automobile insurance policies amended, delivered, issued, or renewed on or after the effective date of the amendatory Act.

Indiana

None

 

Iowa

None

 

Kansas None

 

Kentucky

None

 

Louisiana

None

 

Maine

None

 

Maryland

S.B. 1028

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.

Minnesota

S.F. 2770

Requires the commissioner of commerce to study the issue of automobile insurance affordability and make specific recommendations to the House of Representatives and Senate policy committees with jurisdiction over commerce. The study must include an analysis of the prices that insurers are currently charging policyholders, including those in selected low- and moderate-income zip codes. The study must also analyze the impact that the use of socioeconomic indicators such as education, occupation, marital status, gender, homeownership, credit scores, insurance scores, and prior insurance coverage has on premium setting. The recommendations must, at a minimum, be designed to: (1) improve access to affordable coverage for traditionally underserved communities, including rural areas, and consumers, minorities, and low- and moderate-income persons; and (2) identify the specific cost drivers of automobile insurance rates and suggest appropriate modifications or restrictions on their use.

Mississippi

H.B. 1211

Died in committee 2/23/16

Restricts the use of credit scores by insurers to underwrite or rate risks for personal insurance.

Mississippi

S.B. 2317

Died in committee 2/23/16

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. 2119

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 contracts entered into or renewed on or after Jan. 1, 2017.

Montana

None

 

Nebraska

None

 

Nevada

No regular 2016 session

 

New Hampshire

H.B. 1342

Failed to pass House 3/10/16

This bill makes it a discriminatory and unfair insurance trade practice to charge higher premiums for automobile and homeowners insurance based on credit rating. Current law allows the use of credit reports for such purposes if it is not the sole reason for higher premiums. This bill also prohibits insurers from requesting certain information to underwrite casualty insurance coverage.

New Jersey

S.B. 1869

This bill requires the Department of Banking and Insurance (department) 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. 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 No regular 2016 session  
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

S.B. 1402

Relates to auto insurance; relates to the use of credit information; prohibits the use of credit information in certain situations; relates to filing of scoring models; prohibits use of credit information in filings; eliminates credit information as trade secret; relates to indemnification of agents; eliminates use of credit information from agent liability.

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. 7470

This bill requires the insurance commissioner to issue regulations prohibiting the use of credit histories, credit scores, occupation or educational level in setting auto insurance rates.

Rhode Island

H.B. 7587

This bill prevents the consideration of an applicant's credit history in determining automobile insurance rates.

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

No regular 2016 session

 

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.

Vermont

H.B. 727

This bill proposes to require the commissioner of Financial Regulation to study the pros and cons of prohibiting insurers from using credit reports to determine rates.

Vermont

H.B. 862

Requires the commissioner of Financial Regulation to conduct a study of credit-based insurance scoring for personal lines insurance. The study shall make findings regarding the prevalence of use of insurance scoring and related rating factors in Vermont, its impact on Vermont insurance consumers, and how limitations on the use of insurance scoring would affect insurance companies doing business in Vermont and the affordability and availability of personal lines insurance. The commissioner shall report his or her findings and recommendations to the General Assembly on or before Dec. 15, 2016. As used in this section, "personal lines insurance" means property and casualty insurance coverage sold to individuals and families for primarily noncommercial purposes.

Virginia

None

 

Virgin Islands Not available  
Washington

None

 

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.

West Virginia

H.B. 2398

Amends and reenacts §33-6B-3 of the Code of West Virginia, 1931, as amended; and amends and reenacts §33-20-3 and §33-20-5 of said code, all relating to prohibiting the number of inquiries reflected in a credit report, credit score report or CLUE report from adversely affecting an application for insurance; limits the use of a credit score to banking institution credit scoring for casualty insurance rate filings; and prohibits reliance on information which is false or potentially false; limits the use of a credit score in casualty insurance rate filings.

West Virginia

H.B. 4257

Adds §33-11-4c, relating to insurance unfair trade practices; prohibits use of a person's credit history in certain insurance transactions.

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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