Introduced Version






HOUSE BILL No. 1073

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DIGEST OF INTRODUCED BILL



Citations Affected: IC 27-2-21.

Synopsis: Credit scoring. Prohibits consideration of credit information in any manner in connection with the renewal of a personal insurance policy. Allows an insurer to maintain in the current tier an insured who is eligible to be placed in a less favorably priced tier after re-underwriting and re-rating based on current credit information. Removes a disclosure exemption.

Effective: July 1, 2013.





Lehman




    January 7, 2013, read first time and referred to Committee on Insurance.







Introduced

First Regular Session 118th General Assembly (2013)


PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in this style type.
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HOUSE BILL No. 1073



    A BILL FOR AN ACT to amend the Indiana Code concerning insurance.

Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 27-2-21-16; (13)IN1073.1.1. -->     SECTION 1. IC 27-2-21-16, AS AMENDED BY P.L.84-2009, SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2013]: Sec. 16. (a) An insurer that uses credit information to underwrite or rate risks shall not do the following:
        (1) Use an insurance score that is calculated using income, gender, address, ZIP code, ethnic group, religion, marital status, or nationality of the consumer as a factor.
        (2) Deny or cancel or decline to renew a personal insurance policy solely on the basis of credit information.
        (3) Base an insured's renewal rate for a personal insurance policy solely on credit information.
        (3) Consider credit information in any manner in connection with the renewal of a personal insurance policy.
        (4) Take an adverse action against a consumer solely because the consumer does not have a credit card account.
        (5) Consider an absence of credit information or an inability to calculate an insurance score in underwriting or rating a personal

insurance policy, unless the insurer does one (1) of the following:
            (A) Presents to the commissioner information that the absence or inability relates to the risk for the insurer and treats the consumer as approved by the commissioner.
            (B) Treats the consumer as if the consumer had neutral credit information, as defined by the insurer.
        (6) Take an adverse action against a consumer based on credit information unless the insurer obtains and uses:
            (A) a credit report issued; or
            (B) an insurance score calculated;
        not more than ninety (90) days before the date the personal insurance policy is first written. or the renewal is issued.
        (7) 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:
                (i) not initiated by the consumer; or
                (ii) requested by the consumer for the consumer's own credit information.
            (B) A credit inquiry relating to insurance coverage.
            (C) A late payment or 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.
            (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.
    (b) An insurer that uses credit information to underwrite or rate risks shall, at annual renewal upon the request of an insured or an insured's agent, re-underwrite and re-rate the insured's personal insurance policy based on a current credit report or insurance score. unless However, this subsection does not apply to an insurer if at least one (1) of the following applies:
        (1) The insurer's treatment of the consumer is otherwise approved by the commissioner.
        (2) The insured is in the most favorably priced tier of the insurer, within a group of affiliated insurers.


        (3) Credit information was not used for underwriting or rating the insured when the personal insurance policy was initially written.
        (4) The insurer reevaluates the insured at least every thirty-six (36) months after a personal insurance policy is issued based on underwriting or rating factors other than credit information.
        (5) (4) The insurer has re-underwritten and re-rated the insured's personal insurance policy based on a credit report obtained or an insurance score recalculated less than twelve (12) months before the date of the request by the insured or the insured's agent.
    (c) An insurer that uses credit information to underwrite or rate risks may obtain current credit information upon the renewal of a personal insurance policy when renewal occurs more frequently than every thirty-six (36) months if consistent with the insurer's underwriting guidelines.
     (c) If:
        (1) an insurer re-underwrites and re-rates an insured's personal insurance policy under subsection (b); and
        (2) the result of the insurer's action under subdivision (1) is that the insured is eligible to be placed in a less favorably priced tier of the insurer than the insured's current tier;
the insurer shall maintain the insured in the insured's current tier. Maintaining an insured in the insured's current tier under this subsection is not a discriminatory act in the business of insurance.

SOURCE: IC 27-2-21-18; (13)IN1073.1.2. -->     SECTION 2. IC 27-2-21-18 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2013]: Sec. 18. (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.".