Florida Senate - 2011                                     SB 938
       By Senator Storms
       10-00169-11                                            2011938__
    1                        A bill to be entitled                      
    2         An act relating to insurance; amending s. 626.9541,
    3         F.S.; prohibiting an insurer that issues motor vehicle
    4         insurance from using a rate, rating schedule, rating
    5         manual, or an underwriting rule that is not contained
    6         in a rating manual and is determined in whole or in
    7         part on the basis of certain characteristics of an
    8         insured; including the refusal to insure or continue
    9         to insure any individual or risk because of
   10         educational level, trade, business, occupation,
   11         profession, credit report, credit score, or certain
   12         forms of lawful employment among the list of
   13         activities constituting unfair methods of competition
   14         and unfair or deceptive acts; amending s. 626.9741,
   15         F.S.; prohibiting insurers from using credit reports
   16         and credit scores in making rating determinations;
   17         deleting provisions limiting and regulating the use of
   18         credit scores by insurers when making rating
   19         determinations; deleting the definition of “adverse
   20         decision” and “tier”; deleting provisions authorizing
   21         the Financial Services Commission to adopt rules;
   22         providing an effective date.
   24  Be It Enacted by the Legislature of the State of Florida:
   26         Section 1. Paragraphs (o) and (x) of subsection (1) of
   27  section 626.9541, Florida Statutes, are amended to read:
   28         626.9541 Unfair methods of competition and unfair or
   29  deceptive acts or practices defined.—
   31  ACTS.—The following are defined as unfair methods of competition
   32  and unfair or deceptive acts or practices:
   33         (o) Illegal dealings in premiums; excess or reduced charges
   34  for insurance.—
   35         1. Knowingly collecting any sum as a premium or charge for
   36  insurance, which is not then provided, or is not in due course
   37  to be provided, subject to acceptance of the risk by the
   38  insurer, by an insurance policy issued by an insurer as
   39  permitted by this code.
   40         2. Knowingly collecting as a premium or charge for
   41  insurance any sum in excess of or less than the premium or
   42  charge applicable to such insurance, in accordance with the
   43  applicable classifications and rates as filed with and approved
   44  by the office, and as specified in the policy; or, in cases
   45  where when classifications, premiums, or rates are not required
   46  by this code to be so filed and approved, premiums and charges
   47  collected from a state Florida resident in excess of or less
   48  than those specified in the policy and as fixed by the insurer.
   49  This provision does shall not be deemed to prohibit the charging
   50  and collection, by surplus lines agents licensed under part VIII
   51  of this chapter, of the amount of applicable state and federal
   52  taxes, or fees as authorized by s. 626.916(4), in addition to
   53  the premium required by the insurer or the charging and
   54  collection, by licensed agents, of the exact amount of any
   55  discount or other such fee charged by a credit card facility in
   56  connection with the use of a credit card, as authorized by
   57  subparagraph (q)3., in addition to the premium required by the
   58  insurer. This subparagraph does shall not be construed to
   59  prohibit collection of a premium for a universal life or a
   60  variable or indeterminate value insurance policy made in
   61  accordance with the terms of the contract.
   62         3.a. Imposing or requesting an additional premium for a
   63  policy of motor vehicle liability, personal injury protection,
   64  medical payment, or collision insurance or any combination
   65  thereof or refusing to renew the policy solely because the
   66  insured was involved in a motor vehicle accident unless the
   67  insurer’s file contains information from which the insurer in
   68  good faith determines that the insured was substantially at
   69  fault in the accident.
   70         b. An insurer that which imposes and collects such a
   71  surcharge or which refuses to renew such policy shall, in
   72  conjunction with the notice of premium due or notice of
   73  nonrenewal, notify the named insured that he or she is entitled
   74  to reimbursement of such amount or renewal of the policy under
   75  the conditions listed below and will subsequently reimburse him
   76  or her or renew the policy, if the named insured demonstrates
   77  that the operator involved in the accident was:
   78         (I) Lawfully parked;
   79         (II) Reimbursed by, or on behalf of, a person responsible
   80  for the accident or has a judgment against such person;
   81         (III) Struck in the rear by another vehicle headed in the
   82  same direction and was not convicted of a moving traffic
   83  violation in connection with the accident;
   84         (IV) Hit by a “hit-and-run” driver, if the accident was
   85  reported to the proper authorities within 24 hours after
   86  discovering the accident;
   87         (V) Not convicted of a moving traffic violation in
   88  connection with the accident, but the operator of the other
   89  automobile involved in such accident was convicted of a moving
   90  traffic violation;
   91         (VI) Finally adjudicated not to be liable by a court of
   92  competent jurisdiction;
   93         (VII) In receipt of a traffic citation that which was
   94  dismissed or nolle prossed; or
   95         (VIII) Not at fault as evidenced by a written statement
   96  from the insured establishing facts demonstrating lack of fault
   97  which are not rebutted by information in the insurer’s file from
   98  which the insurer in good faith determines that the insured was
   99  substantially at fault.
  100         c. In addition to the other provisions of this
  101  subparagraph, an insurer may not fail to renew a policy if the
  102  insured has had only one accident in which he or she was at
  103  fault within the current 3-year period. However, an insurer may
  104  nonrenew a policy for reasons other than accidents in accordance
  105  with s. 627.728. This subparagraph does not prohibit nonrenewal
  106  of a policy under which the insured has had three or more
  107  accidents, regardless of fault, during the most recent 3-year
  108  period.
  109         4. Imposing or requesting an additional premium for, or
  110  refusing to renew, a policy for motor vehicle insurance solely
  111  because the insured committed a noncriminal traffic infraction
  112  as described in s. 318.14 unless the infraction is:
  113         a. A second infraction committed within an 18-month period,
  114  or a third or subsequent infraction committed within a 36-month
  115  period.
  116         b. A violation of s. 316.183 if, when such violation is a
  117  result of exceeding the lawful speed limit by more than 15 miles
  118  per hour.
  119         5. Upon the request of the insured, the insurer and
  120  licensed agent shall supply to the insured the complete proof of
  121  fault or other criteria that which justifies the additional
  122  charge or cancellation.
  123         6. An No insurer may not shall impose or request an
  124  additional premium for motor vehicle insurance, cancel or refuse
  125  to issue a policy, or refuse to renew a policy because the
  126  insured or the applicant is a handicapped or physically disabled
  127  person if, so long as such handicap or physical disability does
  128  not substantially impair such person’s mechanically assisted
  129  driving ability.
  130         7. An No insurer may not cancel or otherwise terminate an
  131  any insurance contract or coverage, or require execution of a
  132  consent to rate endorsement, during the stated policy term for
  133  the purpose of offering to issue, or issuing, a similar or
  134  identical contract or coverage to the same insured with the same
  135  exposure at a higher premium rate or continuing an existing
  136  contract or coverage with the same exposure at an increased
  137  premium.
  138         8. An No insurer may not issue a nonrenewal notice on any
  139  insurance contract or coverage, or require execution of a
  140  consent to rate endorsement, for the purpose of offering to
  141  issue, or issuing, a similar or identical contract or coverage
  142  to the same insured at a higher premium rate or continuing an
  143  existing contract or coverage at an increased premium without
  144  meeting any applicable notice requirements.
  145         9. An No insurer may not shall, with respect to premiums
  146  charged for motor vehicle insurance, unfairly discriminate
  147  solely on the basis of age, sex, marital status, or scholastic
  148  achievement.
  149         10.An insurer may not, with respect to premiums charged
  150  for motor vehicle insurance, use any rate, rating schedule,
  151  rating manual, or underwriting rule that is not contained in a
  152  rating manual and that is determined in whole or in part on the
  153  basis of any of the following as they relate to an insured:
  154         a.Educational level.
  155         b.Trade, business, occupation, profession, or any lawful
  156  form of employment that does not directly involve the use of one
  157  or more vehicles specifically insured or identified in the
  158  insurance policy.
  159         c.Credit report or credit score as defined in s. 626.9741.
  160         11.10. Imposing or requesting an additional premium for
  161  motor vehicle comprehensive or uninsured motorist coverage
  162  solely because the insured was involved in a motor vehicle
  163  accident or was convicted of a moving traffic violation.
  164         12.11.An No insurer may not shall cancel or issue a
  165  nonrenewal notice on any insurance policy or contract without
  166  complying with any applicable cancellation or nonrenewal
  167  provision required under the Florida Insurance Code.
  168         13.12.An No insurer may not shall impose or request an
  169  additional premium, cancel a policy, or issue a nonrenewal
  170  notice on any insurance policy or contract because of any
  171  traffic infraction if when adjudication has been withheld and no
  172  points have not been assessed pursuant to s. 318.14(9) and (10).
  173  However, this subparagraph does not apply to traffic infractions
  174  involving accidents in which the insurer has incurred a loss due
  175  to the fault of the insured.
  176         (x) Refusal to insure.—In addition to other provisions of
  177  this code, the refusal to insure, or continue to insure, any
  178  individual or risk solely because of:
  179         1. Race, color, religion creed, marital status, sex, or
  180  national origin;
  181         2. The residence or, age, or lawful occupation of the
  182  individual or the location of the risk, unless there is a
  183  reasonable relationship between the residence or, age, or lawful
  184  occupation of the individual or the location of the risk and the
  185  coverage issued or to be issued;
  186         3. The individual’s educational level, trade, business,
  187  occupation, profession, any form of lawful employment, or credit
  188  report or credit score as defined in s. 626.9741;
  189         4.3. The insured’s or applicant’s failure to agree to place
  190  collateral business with any insurer, unless the coverage
  191  applied for provides would provide liability coverage that which
  192  is greater than excess over that provided in policies maintained
  193  on property or motor vehicles;
  194         5.4. The insured’s or applicant’s failure to purchase
  195  noninsurance services or commodities, including automobile
  196  services as defined in s. 624.124;
  197         6.5. The fact that the insured or applicant is a public
  198  official; or
  199         7.6. The fact that the insured or applicant had been
  200  previously refused insurance coverage by any insurer if, when
  201  such refusal to insure or continue to insure for this reason
  202  occurs with such frequency as to indicate a general business
  203  practice.
  204         Section 2. Section 626.9741, Florida Statutes, is amended
  205  to read:
  206         626.9741 Use of credit reports and credit scores by
  207  insurers.—An insurer may not use credit reports or credit scores
  208  in making rating determinations. For purposes of this section,
  209  the term:
  210         (1)The purpose of this section is to regulate and limit
  211  the use of credit reports and credit scores by insurers for
  212  underwriting and rating purposes. This section applies only to
  213  personal lines motor vehicle insurance and personal lines
  214  residential insurance, which includes homeowners, mobile home
  215  owners’ dwelling, tenants, condominium unit owners, cooperative
  216  unit owners, and similar types of insurance.
  217         (2)As used in this section, the term:
  218         (a)“Adverse decision” means a decision to refuse to issue
  219  or renew a policy of insurance; to issue a policy with
  220  exclusions or restrictions; to increase the rates or premium
  221  charged for a policy of insurance; to place an insured or
  222  applicant in a rating tier that does not have the lowest
  223  available rates for which that insured or applicant is otherwise
  224  eligible; or to place an applicant or insured with a company
  225  operating under common management, control, or ownership which
  226  does not offer the lowest rates available, within the affiliate
  227  group of insurance companies, for which that insured or
  228  applicant is otherwise eligible.
  229         (1)(b) “Credit report” means any written, oral, or other
  230  communication of any information by a consumer reporting agency,
  231  as defined in the federal Fair Credit Reporting Act, 15 U.S.C.
  232  ss. 1681 et seq., bearing on a consumer’s credit worthiness,
  233  credit standing, or credit capacity, which is used or expected
  234  to be used or collected as a factor in establishing to establish
  235  a person’s eligibility for credit or insurance, or any other
  236  purpose authorized pursuant to the applicable provision of the
  237  such federal act. A credit score alone, as calculated by a
  238  credit reporting agency or by or for the insurer, may not be
  239  considered a credit report.
  240         (2)(c) “Credit score” means a score, grade, or value that
  241  is derived by using any or all data from a credit report in any
  242  type of model, method, or program, whether electronically, in an
  243  algorithm, computer software or program, or any other process,
  244  for the purpose of grading or ranking credit report data.
  245         (d)“Tier” means a category within a single insurer into
  246  which insureds with substantially similar risk, exposure, or
  247  expense factors are placed for purposes of determining rate or
  248  premium.
  249         (3)An insurer must inform an applicant or insured, in the
  250  same medium as the application is taken, that a credit report or
  251  score is being requested for underwriting or rating purposes. An
  252  insurer that makes an adverse decision based, in whole or in
  253  part, upon a credit report must provide at no charge, a copy of
  254  the credit report to the applicant or insured or provide the
  255  applicant or insured with the name, address, and telephone
  256  number of the consumer reporting agency from which the insured
  257  or applicant may obtain the credit report. The insurer must
  258  provide notification to the consumer explaining the reasons for
  259  the adverse decision. The reasons must be provided in
  260  sufficiently clear and specific language so that a person can
  261  identify the basis for the insurer’s adverse decision. Such
  262  notification shall include a description of the four primary
  263  reasons, or such fewer number as existed, which were the primary
  264  influences of the adverse decision. The use of generalized terms
  265  such as “poor credit history,” “poor credit rating,” or “poor
  266  insurance score” does not meet the explanation requirements of
  267  this subsection. A credit score may not be used in underwriting
  268  or rating insurance unless the scoring process produces
  269  information in sufficient detail to permit compliance with the
  270  requirements of this subsection. It shall not be deemed an
  271  adverse decision if, due to the insured’s credit report or
  272  credit score, the insured continues to receive a less favorable
  273  rate or placement in a less favorable tier or company at the
  274  time of renewal except for renewals or reunderwriting required
  275  by this section.
  276         (4)(a)An insurer may not request a credit report or score
  277  based upon the race, color, religion, marital status, age,
  278  gender, income, national origin, or place of residence of the
  279  applicant or insured.
  280         (b)An insurer may not make an adverse decision solely
  281  because of information contained in a credit report or score
  282  without consideration of any other underwriting or rating
  283  factor.
  284         (c)An insurer may not make an adverse decision or use a
  285  credit score that could lead to such a decision if based, in
  286  whole or in part, on:
  287         1.The absence of, or an insufficient, credit history, in
  288  which instance the insurer shall:
  289         a.Treat the consumer as otherwise approved by the Office
  290  of Insurance Regulation if the insurer presents information that
  291  such an absence or inability is related to the risk for the
  292  insurer;
  293         b.Treat the consumer as if the applicant or insured had
  294  neutral credit information, as defined by the insurer;
  295         c.Exclude the use of credit information as a factor and
  296  use only other underwriting criteria;
  297         2.Collection accounts with a medical industry code, if so
  298  identified on the consumer’s credit report;
  299         3.Place of residence; or
  300         4.Any other circumstance that the Financial Services
  301  Commission determines, by rule, lacks sufficient statistical
  302  correlation and actuarial justification as a predictor of
  303  insurance risk.
  304         (d)An insurer may use the number of credit inquiries
  305  requested or made regarding the applicant or insured except for:
  306         1.Credit inquiries not initiated by the consumer or
  307  inquiries requested by the consumer for his or her own credit
  308  information.
  309         2.Inquiries relating to insurance coverage, if so
  310  identified on a consumer’s credit report.
  311         3.Collection accounts with a medical industry code, if so
  312  identified on the consumer’s credit report.
  313         4.Multiple lender inquiries, if coded by the consumer
  314  reporting agency on the consumer’s credit report as being from
  315  the home mortgage industry and made within 30 days of one
  316  another, unless only one inquiry is considered.
  317         5.Multiple lender inquiries, if coded by the consumer
  318  reporting agency on the consumer’s credit report as being from
  319  the automobile lending industry and made within 30 days of one
  320  another, unless only one inquiry is considered.
  321         (e)An insurer must, upon the request of an applicant or
  322  insured, provide a means of appeal for an applicant or insured
  323  whose credit report or credit score is unduly influenced by a
  324  dissolution of marriage, the death of a spouse, or temporary
  325  loss of employment. The insurer must complete its review within
  326  10 business days after the request by the applicant or insured
  327  and receipt of reasonable documentation requested by the
  328  insurer, and, if the insurer determines that the credit report
  329  or credit score was unduly influenced by any of such factors,
  330  the insurer shall treat the applicant or insured as if the
  331  applicant or insured had neutral credit information or shall
  332  exclude the credit information, as defined by the insurer,
  333  whichever is more favorable to the applicant or insured. An
  334  insurer shall not be considered out of compliance with its
  335  underwriting rules or rates or forms filed with the Office of
  336  Insurance Regulation or out of compliance with any other state
  337  law or rule as a result of granting any exceptions pursuant to
  338  this subsection.
  339         (5)A rate filing that uses credit reports or credit scores
  340  must comply with the requirements of s. 627.062 or s. 627.0651
  341  to ensure that rates are not excessive, inadequate, or unfairly
  342  discriminatory.
  343         (6)An insurer that requests or uses credit reports and
  344  credit scoring in its underwriting and rating methods shall
  345  maintain and adhere to established written procedures that
  346  reflect the restrictions set forth in the federal Fair Credit
  347  Reporting Act, this section, and all rules related thereto.
  348         (7)(a)An insurer shall establish procedures to review the
  349  credit history of an insured who was adversely affected by the
  350  use of the insured’s credit history at the initial rating of the
  351  policy, or at a subsequent renewal thereof. This review must be
  352  performed at a minimum of once every 2 years or at the request
  353  of the insured, whichever is sooner, and the insurer shall
  354  adjust the premium of the insured to reflect any improvement in
  355  the credit history. The procedures must provide that, with
  356  respect to existing policyholders, the review of a credit report
  357  will not be used by the insurer to cancel, refuse to renew, or
  358  require a change in the method of payment or payment plan.
  359         (b)However, as an alternative to the requirements of
  360  paragraph (a), an insurer that used a credit report or credit
  361  score for an insured upon inception of a policy, who will not
  362  use a credit report or score for reunderwriting, shall
  363  reevaluate the insured within the first 3 years after inception,
  364  based on other allowable underwriting or rating factors,
  365  excluding credit information if the insurer does not increase
  366  the rates or premium charged to the insured based on the
  367  exclusion of credit reports or credit scores.
  368         (8)The commission may adopt rules to administer this
  369  section. The rules may include, but need not be limited to:
  370         (a)Information that must be included in filings to
  371  demonstrate compliance with subsection (3).
  372         (b)Statistical detail that insurers using credit reports
  373  or scores under subsection (5) must retain and report annually
  374  to the Office of Insurance Regulation.
  375         (c)Standards that ensure that rates or premiums associated
  376  with the use of a credit report or score are not unfairly
  377  discriminatory, based upon race, color, religion, marital
  378  status, age, gender, income, national origin, or place of
  379  residence.
  380         (d)Standards for review of models, methods, programs, or
  381  any other process by which to grade or rank credit report data
  382  and which may produce credit scores in order to ensure that the
  383  insurer demonstrates that such grading, ranking, or scoring is
  384  valid in predicting insurance risk of an applicant or insured.
  385         Section 3. This act shall take effect July 1, 2011.