Citations Affected: IC 27-2-21.
Synopsis: Insurer use of credit information. Applies requirements to
an insurer's use of credit information in the underwriting of personal
property and casualty insurance.
Effective: July 1, 2003.
January 14, 2003, read first time and referred to Committee on Insurance, Corporations and
A BILL FOR AN ACT to amend the Indiana Code concerning
by the commissioner.
(ii) The insured is in the most favorably priced tier of the insurer, within a group of affiliated insurers.
(iii) Credit information was not used for underwriting or rating the insured when the personal insurance policy was initially written.
(iv) The insurer reevaluates the insured based on underwriting or rating factors other than credit information at least every thirty-six (36) months after a personal insurance policy is issued.
This clause does not require an insurer to recalculate an insurance score or obtain an updated credit report of a consumer more frequently than one (1) time in a twelve (12) month period.
(B) An insurer may obtain current credit information upon the renewal of a personal insurance policy when renewal occurs more frequently than the thirty-six (36) month periods specified in this subdivision that begin on the last date the insurer obtained credit information for the insured, if consistent with the insurer's underwriting guidelines.
(8) Use the following as a negative factor in an insurance scoring methodology or in reviewing credit information for the purpose of underwriting or rating a personal insurance policy:
(A) A credit inquiry not initiated or requested by the consumer for the consumer's own credit information.
(B) An inquiry:
(i) relating to; and
(ii) identified on the consumer's credit report as an inquiry relating to;
(C) A collection account:
(i) with a medical industry code; and
(ii) identified as a collection account with a medical industry code on the consumer's credit report.
(D) Multiple lender inquiries:
(i) coded by the consumer reporting agency on the consumer's credit report as being from the home mortgage industry; and
(ii) made within thirty (30) days of one another.
However, one (1) inquiry described in this clause may be
(E) Multiple lender inquiries:
(i) coded by the consumer reporting agency on the consumer's credit report as being from the automobile lending industry; and
(ii) made within thirty (30) days of one another.
However, one (1) inquiry described in this clause may be considered.
Sec. 16. (a) If:
(1) a determination is made through the dispute resolution process set forth in the federal Fair Credit Reporting Act, 15 U.S.C. 1681i(a)(5) that the credit information of a current insured was incorrect or incomplete; and
(2) the insurer receives notice of the determination from the consumer reporting agency or the insured;
the insurer shall re-underwrite and re-rate the insured not more than thirty (30) days after receiving the notice.
(b) After an insurer re-underwrites or re-rates an insured as described in subsection (a), the insurer shall:
(1) make necessary adjustments, consistent with the insurer's underwriting and rating guidelines; and
(2) if the insurer determines that the insured has overpaid premium, refund to the insured the amount of overpayment calculated back to the shorter of the:
(A) immediately preceding twelve (12) months of coverage; or
(B) actual policy period.
Sec. 17. (a) If an insurer uses credit information in underwriting or rating a consumer, the insurer or the insurer's agent shall disclose, either on the insurance application or at the time the insurance application is taken, that the insurer may obtain credit information in connection with the application. The disclosure must be:
(1) written; or
(2) provided to the consumer in the same medium as the application for insurance.
The insurer is not required to provide the disclosure statement required under this section to an insured on a renewal policy if the insured has previously been provided a disclosure statement.
(b) Use of the following sample disclosure statement constitutes compliance with this section: "In connection with this application for insurance, we may review your credit report or obtain or use
a credit based insurance score based on the information contained
in that credit report. We may use a third party in connection with
the development of your insurance score.".
Sec. 18. (a) If an insurer takes an adverse action based on credit information, the insurer shall:
(1) provide notice to the consumer that an adverse action has been taken, in accordance with the requirements of the federal Fair Credit Reporting Act, 15 U.S.C. 1681m(a)l; and
(2) provide notice to the consumer explaining the reason for the adverse action.
(b) The reason provided under subsection (a) must be provided in sufficiently clear and specific language so that an individual can identify the basis for the insurer's decision to take an adverse action. The notice must include a description of not more than four (4) factors that were the primary influences of the adverse action. The use of generalized terms such as "poor credit history", "poor credit rating", or "poor insurance score" does not meet requirements of this subsection. A standardized credit explanation provided by a consumer reporting agency or other third party vendor meets the requirements of this section.
Sec. 19. (a) An insurer that uses an insurance score to underwrite and rate risks shall file the insurer's scoring models or other scoring processes with the department.
(b) A third party may file a scoring model or scoring process on behalf of an insurer.
(c) A filing that includes insurance scoring may include loss experience justifying the use of credit information.
(d) A filing related to credit information is confidential.
Sec. 20. (a) An insurer shall indemnify and defend an insurance producer and hold an insurance producer harmless from and against liability, fees, and costs arising out of or related to the actions, errors, or omissions of the insurance producer if the insurance producer:
(1) obtains or uses credit information or insurance scores for an insurer;
(2) follows the instructions of or procedures established by the insurer described in subdivision (1); and
(3) complies with applicable laws and regulations.
(b) This section does not provide a consumer with a cause of action that does not exist in the absence of this section.
Sec. 21. (a) A consumer reporting agency may not provide or sell data or lists that include information submitted in conjunction
(1) an insurance inquiry about a consumer's credit information; or
(2) a request for a credit report or insurance score;
including the expiration dates of an insurance policy or other information that may identify periods during which a consumer's insurance expires and the terms and conditions of the consumer's insurance coverage.
(b) The restrictions under subsection (a) do not apply to data or lists a consumer reporting agency supplies to an:
(1) insurance producer from whom the information was received;
(2) insurer on behalf of which the insurance producer described in subdivision (1) acted; or
(3) affiliate or a holding company of the insurer described in subdivision (2).
(c) This section does not prohibit an insurer from obtaining a claim history report or a motor vehicle report.