Use of Credit Information in 2022 Insurance Legislation

Heather Morton 5/25/2022

Credit Report

Insurance companies often use credit information to determine a consumer’s level of risk before selling or renewing auto, homeowner or renter insurance policies. Insurers create scores for their customers to predict future loss exposure during the underwriting and rating process. The companies believe there is a direct correlation between a consumer’s financial stability and risk of filing a claim. Insurers argue that credit-based scores are more accurate indicators of risk than driving records, which can be wiped clean of information on car crashes and safety violations. Opponents of credit-based scoring argue that the process is not transparent enough and disproportionally rates consumers with low income and people of color as higher risks. Insurers may use a consumer’s credit score as one factor in assigning premiums and in deciding whether to accept or decline coverage or to place a consumer with a nonstandard (generally higher priced) insurer.

At least 10 states have introduced legislation addressing the use of credit information in insurance in the 2022 session.

Use the box below to conduct a full-text search or type in the state name.

 

 

Use of Credit Information in 2022 Insurance Legislation

State:

Bill Number:

Bill Summary:

Alabama

None

 

Alaska

None

 

Arizona

None

 

Arkansas

None

 

California

None

 

Colorado

None

 

Connecticut

None

 

Delaware

None

 

District of Columbia

None

 

Florida

None

 

Georgia

None

 

Guam

None

 

Hawaii

None

 

Idaho

None

 

Illinois

HB 5140

Amends the Illinois Insurance Code. Provides that no insurer shall utilize, rate, or underwrite in whole or in part an applicant's or insured's education level, employment, trade, business, occupation or profession, or credit report or credit information to determine: whether to issue, deny, cancel, or nonrenew an automobile insurance policy; whether to renew an automobile insurance policy; the appropriate premium for an automobile insurance policy; the appropriate tier for an automobile insurance policy; or an insurance score for an applicant or insured. Defines terms. Amends the Use of Credit Information in Personal Insurance Act. Removes private passenger automobile insurance policies from the definition of "personal insurance."

Illinois

SB 3825

Amends the Illinois Insurance Code. Provides that no insurer shall utilize, rate, or underwrite in whole or in part an applicant's or insured's education level, employment, trade, business, occupation or profession, or credit report or credit information to determine: whether to issue, deny, cancel, or nonrenew an automobile insurance policy; whether to renew an automobile insurance policy; the appropriate premium for an automobile insurance policy; the appropriate tier for an automobile insurance policy; or an insurance score for an applicant or insured. Defines terms. Amends the Use of Credit Information in Personal Insurance Act. Removes private passenger automobile insurance policies from the definition of "personal insurance.”

Indiana

None

 

Iowa

None

 

Kansas

None

 

Kentucky

None

 

Louisiana

HB 351

Amends and reenacts R.S. 22:1454(A) and repeals Subpart P of Part IV of Chapter 4 of Title 22 of the Louisiana Revised Statutes of 1950, comprised of R.S. 22:1501 through 1514, relative to insurance rating standards and methods; prohibits rate classification based on an insured's education level, employment, trade, business, occupation, profession, or credit information; repeals provisions regarding the use of credit information; and provides for related matters.

Maine

None

 

Maryland

HB 436
Passed House 3/11/22

Requires, with respect to private passenger motor vehicle insurance, an insurer that uses credit information to provide certain exceptions to the insurer’s rates, ratings classifications, company or tier placement, and underwriting rules or guidelines to certain applicants and insureds on request; authorizes an insurer to take certain actions if an applicant or insured submits a request for an exception; provides that an insurer is not out of compliance with any law or rule relating to underwriting, rating, or rate filing as a result of granting an exception; establishes certain notice, reporting, and other requirements related to requests for exceptions; and generally relates to rating policies of private passenger motor vehicle insurance.

Maryland

HB 690

Prohibits an insurer, with respect to private passenger motor vehicle insurance, from rating a risk based, in whole or in part, on the credit history of an applicant or insured in any manner; repeals certain provisions of law authorizing an insurer to use the credit history of an applicant or insured to rate a new policy of private passenger motor vehicle insurance subject to certain limitations and requirements; and generally relates to rating policies of private passenger motor vehicle insurance.

Massachusetts

None

 

Michigan

HB 5931

Repeals certain miscellaneous changes to coverages and benefits. Repeals the provisions that an insurer shall not use an individual's credit score to establish or maintain rates or rating classifications for automobile insurance.

Michigan

HB 5990

Requires rates to be based on only certain factors.

Michigan

HB 6005

Modifies rate discrimination protections.

Michigan

SB 1002

Requires rates to be based on only certain factors.

Minnesota

HF 3589

Relates to insurance; requires certain disclosures related to credit information.

Mississippi

None

 

Missouri

None

 

Montana

No regular 2022 legislative session

 

Nebraska

None

 

Nevada

No regular 2022 legislative session

 

New Hampshire

None

 

New Jersey

AB 1674

This bill prohibits automobile insurers from assigning an insured or prospective insured to a rating tier based upon that person’s: (1) educational level; (2) employment, trade, business, occupation or profession; or (3) credit score, or any information derived from an insured’s credit report. The bill also prohibits automobile insurers from inquiring of an insured or applicant for insurance, or of a third-party concerning an insured or applicant, as to these factors.

New Jersey

AB 2148
SB 937

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 rating.

New Jersey

SB 357

This bill prohibits automobile insurers from assigning an insured or prospective insured to a rating tier based upon that person’s: (1) educational level; (2) employment, trade, business, occupation or profession; (3) employment status; (4) homeownership status; (5) marital status; or (6) credit score, or any information derived from an insured’s credit report. This bill also prohibits insurers from taking education, occupation, homeownership status, marital status, or credit score into consideration in determining a consumer’s eligibility for insurance or in calculating a rate for an insured, or in any insurance score used to calculate an insured’s rate.

New Mexico

None

 

New York

AB 3082
SB 5904

Prohibits motor vehicle insurers from discrimination on the basis of socioeconomic factors in determining algorithms used to construct actuarial tables, coverage terms, premiums and/or rates.

New York

AB 5154

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

New York

AB 7218
SB 4656

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

New York

AB 7371
SB 6456

Prohibits automobile insurers from refusing to issue or renew an individual's policy based on such individual's credit history.

New York

AB 8126

Prohibits using a consumer's credit score to determine such consumer's access, price, or premium for any insurance policy or other service such consumer is mandated by the state to purchase.

North Carolina

None

 

North Dakota

No regular 2022 legislative session

 

N. Mariana Islands

Not available

 

Ohio

None

 

Oklahoma

HB 3186

Enacts the Insurance Consumer Rights Act; defines terms; prohibits discrimination by insurers; prohibits the use of algorithms and predictive models that unfairly discriminate; directs Insurance commissioner to adopt rules; directs process for rule creation; directs use of necessary provisions; permits Insurance commissioner to investigate; clarifies applicability of act; provides for codification; and provides an effective date.

Oregon

HB 4018

Directs an insurer to consider only specified information in determining rates for motor vehicle liability insurance policy. Prohibits an insurer from considering other specified information in determining eligibility, rates or premiums for motor vehicle liability insurance policy. Permits an insurer, under specified circumstances, to consider an abstract of an individual’s nonemployment driving record when evaluating the individual’s application to obtain or renew motor vehicle liability insurance. Prohibits an insurer from using credit history to determine eligibility, rates or premiums for motor vehicle liability insurance.

Pennsylvania

None

 

Puerto Rico

None

 

Rhode Island

HB 7230

The bill prohibits the use of any external consumer data and information sources, as well as any algorithms or predictive models that use external consumer data and information sources, in a way that unfairly discriminates based on race, color, national or ethnic origin, religion, sex, sexual orientation, disability, gender identity, or gender expression, by an insurer in regard to any insurance practice. The act would further direct the director of business regulation, in consultation with the health insurance commissioner, to promulgate rules and regulations to enforce these provisions.

Rhode Island

HB 7371

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

A. Samoa

Not available

 

South Carolina

None

 

South Dakota

None

 

Tennessee

None

 

Texas

No regular 2022 legislative session

 

Utah

None

 

Vermont

None

 

Virginia

HB 446

Prohibits any policy for motor vehicle insurance that uses any of the following characteristics of a driver as a factor in calculating auto insurance rates or determining eligibility for a policy from being issued in the Commonwealth: education, occupation, employment status, homeownership status, credit score, gender, zip code, census tract, marital status, previous insurer, or previous purchase of insurance.

U.S. Virgin Islands

None

 

Washington

SB 5623

Prohibits the use of credit history to increase rates or premiums at renewal for any personal insurance policy holder beginning on July 1, 2023. Allows insurers to resume the use of credit history effective immediately.

Washington

SB 5879

Requires insurers to provide reasonable exceptions to insurance rates for consumers experiencing extraordinary life circumstances, if contacted in writing.

Washington

SB 5969

Establishes a work group, convened by a mediator, to examine the use of credit history in insurance scores. Requires the work group to develop viable policy options for the Legislature's consideration by Dec. 1, 2022. Prohibits the Office of the Insurance Commissioner (OIC) from adopting any rules that would conflict with current law regarding the use of credit history in insurance scores until June 30, 2023. Requires insurers to provide information on the consumer experience with the OIC's emergency rule within three months from the date of the request by the work group.

West Virginia

HB 2170

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

West Virginia

HB 2531

Adds a new section, designated §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

 

Powered by LexisNexis State NetLexisNexis Terms and Conditions

 

Heather Morton is a senior fellow in NCSL’s Fiscal Affairs Program. She covers financial services, alcohol production and sales, and telecommunications issues.

 

Additional Resources