HB 683

1	A bill to be entitled
2	An act relating to the prohibition of discriminatory
3	rating practices; amending s. 626.9541, F.S.; revising
4	unfair methods of competition and unfair or deceptive acts
5	or practices to prohibit use of education, occupation,
6	credit report, or credit score by insurers in making
7	rating determinations; amending s. 626.9741, F.S.;
8	prohibiting use of credit reports or credit scores by
9	insurers in making rating determinations; deleting
10	provisions regulating and limiting uses of credit reports
11	and credit scores by insurers for certain purposes for
12	certain types of insurance; providing an effective date.
13
14	WHEREAS, the use of credit reports or credit scores by
15	insurers in making rating determinations during this time of
16	economic hardship has had an adverse impact on policyholders by
17	affecting the affordability of insurance for Florida's citizens,
18	and
19	WHEREAS, the use of credit reports, credit scores,
20	occupation, and education in making rating determinations has an
21	adverse and disproportionate effect on Florida's citizens based
22	on race, color, national origin, and income, and
23	WHEREAS, prohibiting the use of credit reports, credit
24	scores, occupation, and education in making rating
25	determinations would prevent the harm done to Florida's
26	policyholders, NOW, THEREFORE,
27
28	Be It Enacted by the Legislature of the State of Florida:
29
30	Section 1.  Paragraphs (o) and (x) of subsection (1) of
31	section 626.9541, Florida Statutes, are amended to read:
32	626.9541  Unfair methods of competition and unfair or
33	deceptive acts or practices defined.--
34	(1)  UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
35	ACTS.--The following are defined as unfair methods of
36	competition and unfair or deceptive acts or practices:
37	(o)  Illegal dealings in premiums; excess or reduced
38	charges for insurance.--
39	1.  Knowingly collecting any sum as a premium or charge for
40	insurance, which is not then provided, or is not in due course
41	to be provided, subject to acceptance of the risk by the
42	insurer, by an insurance policy issued by an insurer as
43	permitted by this code.
44	2.  Knowingly collecting as a premium or charge for
45	insurance any sum in excess of or less than the premium or
46	charge applicable to such insurance, in accordance with the
47	applicable classifications and rates as filed with and approved
48	by the office, and as specified in the policy; or, in cases when
49	classifications, premiums, or rates are not required by this
50	code to be so filed and approved, premiums and charges collected
51	from a Florida resident in excess of or less than those
52	specified in the policy and as fixed by the insurer. This
53	provision shall not be deemed to prohibit the charging and
54	collection, by surplus lines agents licensed under part VIII of
55	this chapter, of the amount of applicable state and federal
56	taxes, or fees as authorized by s. 626.916(4), in addition to
57	the premium required by the insurer or the charging and
58	collection, by licensed agents, of the exact amount of any
59	discount or other such fee charged by a credit card facility in
60	connection with the use of a credit card, as authorized by
61	subparagraph (q)3., in addition to the premium required by the
62	insurer. This subparagraph shall not be construed to prohibit
63	collection of a premium for a universal life or a variable or
64	indeterminate value insurance policy made in accordance with the
65	terms of the contract.
66	3.a.  Imposing or requesting an additional premium for a
67	policy of motor vehicle liability, personal injury protection,
68	medical payment, or collision insurance or any combination
69	thereof or refusing to renew the policy solely because the
70	insured was involved in a motor vehicle accident unless the
71	insurer's file contains information from which the insurer in
72	good faith determines that the insured was substantially at
73	fault in the accident.
74	b.  An insurer which imposes and collects such a surcharge
75	or which refuses to renew such policy shall, in conjunction with
76	the notice of premium due or notice of nonrenewal, notify the
77	named insured that he or she is entitled to reimbursement of
78	such amount or renewal of the policy under the conditions listed
79	below and will subsequently reimburse him or her or renew the
80	policy, if the named insured demonstrates that the operator
81	involved in the accident was:
82	(I)  Lawfully parked;
83	(II)  Reimbursed by, or on behalf of, a person responsible
84	for the accident or has a judgment against such person;
85	(III)  Struck in the rear by another vehicle headed in the
86	same direction and was not convicted of a moving traffic
87	violation in connection with the accident;
88	(IV)  Hit by a "hit-and-run" driver, if the accident was
89	reported to the proper authorities within 24 hours after
90	discovering the accident;
91	(V)  Not convicted of a moving traffic violation in
92	connection with the accident, but the operator of the other
93	automobile involved in such accident was convicted of a moving
94	traffic violation;
95	(VI)  Finally adjudicated not to be liable by a court of
96	competent jurisdiction;
97	(VII)  In receipt of a traffic citation which was dismissed
98	or nolle prossed; or
99	(VIII)  Not at fault as evidenced by a written statement
100	from the insured establishing facts demonstrating lack of fault
101	which are not rebutted by information in the insurer's file from
102	which the insurer in good faith determines that the insured was
103	substantially at fault.
104	c.  In addition to the other provisions of this
105	subparagraph, an insurer may not fail to renew a policy if the
106	insured has had only one accident in which he or she was at
107	fault within the current 3-year period. However, an insurer may
108	nonrenew a policy for reasons other than accidents in accordance
109	with s. 627.728. This subparagraph does not prohibit nonrenewal
110	of a policy under which the insured has had three or more
111	accidents, regardless of fault, during the most recent 3-year
112	period.
113	4.  Imposing or requesting an additional premium for, or
114	refusing to renew, a policy for motor vehicle insurance solely
115	because the insured committed a noncriminal traffic infraction
116	as described in s. 318.14 unless the infraction is:
117	a.  A second infraction committed within an 18-month
118	period, or a third or subsequent infraction committed within a
119	36-month period.
120	b.  A violation of s. 316.183, when such violation is a
121	result of exceeding the lawful speed limit by more than 15 miles
122	per hour.
123	5.  Upon the request of the insured, the insurer and
124	licensed agent shall supply to the insured the complete proof of
125	fault or other criteria which justifies the additional charge or
126	cancellation.
127	6.  An No insurer may not shall impose or request an
128	additional premium for motor vehicle insurance, cancel or refuse
129	to issue a policy, or refuse to renew a policy because the
130	insured or the applicant is a handicapped or physically disabled
131	person, so long as such handicap or physical disability does not
132	substantially impair such person's mechanically assisted driving
133	ability.
134	7.  An No insurer may not cancel or otherwise terminate any
135	insurance contract or coverage, or require execution of a
136	consent to rate endorsement, during the stated policy term for
137	the purpose of offering to issue, or issuing, a similar or
138	identical contract or coverage to the same insured with the same
139	exposure at a higher premium rate or continuing an existing
140	contract or coverage with the same exposure at an increased
141	premium.
142	8.  An No insurer may not issue a nonrenewal notice on any
143	insurance contract or coverage, or require execution of a
144	consent to rate endorsement, for the purpose of offering to
145	issue, or issuing, a similar or identical contract or coverage
146	to the same insured at a higher premium rate or continuing an
147	existing contract or coverage at an increased premium without
148	meeting any applicable notice requirements.
149	9.  An No insurer may not shall, with respect to premiums
150	charged for motor vehicle insurance, unfairly discriminate
151	solely on the basis of age, sex, marital status, or scholastic
152	achievement.
153	10.  Imposing or requesting an additional premium for motor
154	vehicle comprehensive or uninsured motorist coverage solely
155	because the insured was involved in a motor vehicle accident or
156	was convicted of a moving traffic violation.
157	11.  An No insurer may not shall cancel or issue a
158	nonrenewal notice on any insurance policy or contract without
159	complying with any applicable cancellation or nonrenewal
160	provision required under the Florida Insurance Code.
161	12.  An No insurer may not shall impose or request an
162	additional premium, cancel a policy, or issue a nonrenewal
163	notice on any insurance policy or contract because of any
164	traffic infraction when adjudication has been withheld and no
165	points have been assessed pursuant to s. 318.14(9) and (10).
166	However, this subparagraph does not apply to traffic infractions
167	involving accidents in which the insurer has incurred a loss due
168	to the fault of the insured.
169	13.  An insurer may not, with respect to premiums charged
170	for motor vehicle insurance, use any rate, rating schedule,
171	rating manual, or underwriting rule not contained in a rating
172	manual that is determined in whole or in part on the basis of an
173	insured's:
174	a.  Educational level;
175	b.  Lawful employment, trade, business, occupation, or
176	profession; or
177	c.  Credit report or credit score as defined in s.
178	626.9741.
179	(x)  Refusal to insure.--In addition to other provisions of
180	this code, the refusal to insure, or continue to insure, any
181	individual or risk based upon the individual's educational
182	level; lawful employment, trade, business, occupation, or
183	profession; or credit report or credit score as defined in s.
184	626.9741 or solely based upon because of:
185	1.  Race, color, creed, marital status, sex, or national
186	origin;
187	2.  The residence or, age, or lawful occupation of the
188	individual or the location of the risk, unless there is a
189	reasonable relationship between the residence or, age, or lawful
190	occupation of the individual or the location of the risk and the
191	coverage issued or to be issued;
192	3.  The insured's or applicant's failure to agree to place
193	collateral business with any insurer, unless the coverage
194	applied for would provide liability coverage which is excess
195	over that provided in policies maintained on property or motor
196	vehicles;
197	4.  The insured's or applicant's failure to purchase
198	noninsurance services or commodities, including automobile
199	services as defined in s. 624.124;
200	5.  The fact that the insured or applicant is a public
201	official; or
202	6.  The fact that the insured or applicant had been
203	previously refused insurance coverage by any insurer, when such
204	refusal to insure or continue to insure for this reason occurs
205	with such frequency as to indicate a general business practice.
206	Section 2.  Section 626.9741, Florida Statutes, is amended
207	to read:
208	626.9741  Use of credit reports and credit scores by
209	insurers.--
210	(1)  The use of credit reports or credit scores by insurers
211	in making rating determinations is prohibited. The purpose of
212	this section is to regulate and limit the use of credit reports
213	and credit scores by insurers for underwriting and rating
214	purposes. This section applies only to personal lines motor
215	vehicle insurance and personal lines residential insurance,
216	which includes homeowners, mobile home owners' dwelling,
217	tenants, condominium unit owners, cooperative unit owners, and
218	similar types of insurance.
219	(2)  As used in this section, the term:
220	(a)  "Adverse decision" means a decision to refuse to issue
221	or renew a policy of insurance; to issue a policy with
222	exclusions or restrictions; to increase the rates or premium
223	charged for a policy of insurance; to place an insured or
224	applicant in a rating tier that does not have the lowest
225	available rates for which that insured or applicant is otherwise
226	eligible; or to place an applicant or insured with a company
227	operating under common management, control, or ownership which
228	does not offer the lowest rates available, within the affiliate
229	group of insurance companies, for which that insured or
230	applicant is otherwise eligible.
231	(a)(b)  "Credit report" means any written, oral, or other
232	communication of any information by a consumer reporting agency,
233	as defined in the federal Fair Credit Reporting Act, 15 U.S.C.
234	ss. 1681 et seq., bearing on a consumer's credit worthiness,
235	credit standing, or credit capacity, which is used or expected
236	to be used or collected as a factor to establish a person's
237	eligibility for credit or insurance, or any other purpose
238	authorized pursuant to the applicable provision of such federal
239	act. A credit score alone, as calculated by a credit reporting
240	agency or by or for the insurer, may not be considered a credit
241	report.
242	(b)(c)  "Credit score" means a score, grade, or value that
243	is derived by using any or all data from a credit report in any
244	type of model, method, or program, whether electronically, in an
245	algorithm, computer software or program, or any other process,
246	for the purpose of grading or ranking credit report data.
247	(d)  "Tier" means a category within a single insurer into
248	which insureds with substantially similar risk, exposure, or
249	expense factors are placed for purposes of determining rate or
250	premium.
251	(3)  An insurer must inform an applicant or insured, in the
252	same medium as the application is taken, that a credit report or
253	score is being requested for underwriting or rating purposes. An
254	insurer that makes an adverse decision based, in whole or in
255	part, upon a credit report must provide at no charge, a copy of
256	the credit report to the applicant or insured or provide the
257	applicant or insured with the name, address, and telephone
258	number of the consumer reporting agency from which the insured
259	or applicant may obtain the credit report. The insurer must
260	provide notification to the consumer explaining the reasons for
261	the adverse decision. The reasons must be provided in
262	sufficiently clear and specific language so that a person can
263	identify the basis for the insurer's adverse decision. Such
264	notification shall include a description of the four primary
265	reasons, or such fewer number as existed, which were the primary
266	influences of the adverse decision. The use of generalized terms
267	such as "poor credit history," "poor credit rating," or "poor
268	insurance score" does not meet the explanation requirements of
269	this subsection. A credit score may not be used in underwriting
270	or rating insurance unless the scoring process produces
271	information in sufficient detail to permit compliance with the
272	requirements of this subsection. It shall not be deemed an
273	adverse decision if, due to the insured's credit report or
274	credit score, the insured continues to receive a less favorable
275	rate or placement in a less favorable tier or company at the
276	time of renewal except for renewals or reunderwriting required
277	by this section.
278	(4)(a)  An insurer may not request a credit report or score
279	based upon the race, color, religion, marital status, age,
280	gender, income, national origin, or place of residence of the
281	applicant or insured.
282	(b)  An insurer may not make an adverse decision solely
283	because of information contained in a credit report or score
284	without consideration of any other underwriting or rating
285	factor.
286	(c)  An insurer may not make an adverse decision or use a
287	credit score that could lead to such a decision if based, in
288	whole or in part, on:
289	1.  The absence of, or an insufficient, credit history, in
290	which instance the insurer shall:
291	a.  Treat the consumer as otherwise approved by the Office
292	of Insurance Regulation if the insurer presents information that
293	such an absence or inability is related to the risk for the
294	insurer;
295	b.  Treat the consumer as if the applicant or insured had
296	neutral credit information, as defined by the insurer;
297	c.  Exclude the use of credit information as a factor and
298	use only other underwriting criteria;
299	2.  Collection accounts with a medical industry code, if so
300	identified on the consumer's credit report;
301	3.  Place of residence; or
302	4.  Any other circumstance that the Financial Services
303	Commission determines, by rule, lacks sufficient statistical
304	correlation and actuarial justification as a predictor of
305	insurance risk.
306	(d)  An insurer may use the number of credit inquiries
307	requested or made regarding the applicant or insured except for:
308	1.  Credit inquiries not initiated by the consumer or
309	inquiries requested by the consumer for his or her own credit
310	information.
311	2.  Inquiries relating to insurance coverage, if so
312	identified on a consumer's credit report.
313	3.  Collection accounts with a medical industry code, if so
314	identified on the consumer's credit report.
315	4.  Multiple lender inquiries, if coded by the consumer
316	reporting agency on the consumer's credit report as being from
317	the home mortgage industry and made within 30 days of one
318	another, unless only one inquiry is considered.
319	5.  Multiple lender inquiries, if coded by the consumer
320	reporting agency on the consumer's credit report as being from
321	the automobile lending industry and made within 30 days of one
322	another, unless only one inquiry is considered.
323	(e)  An insurer must, upon the request of an applicant or
324	insured, provide a means of appeal for an applicant or insured
325	whose credit report or credit score is unduly influenced by a
326	dissolution of marriage, the death of a spouse, or temporary
327	loss of employment. The insurer must complete its review within
328	10 business days after the request by the applicant or insured
329	and receipt of reasonable documentation requested by the
330	insurer, and, if the insurer determines that the credit report
331	or credit score was unduly influenced by any of such factors,
332	the insurer shall treat the applicant or insured as if the
333	applicant or insured had neutral credit information or shall
334	exclude the credit information, as defined by the insurer,
335	whichever is more favorable to the applicant or insured. An
336	insurer shall not be considered out of compliance with its
337	underwriting rules or rates or forms filed with the Office of
338	Insurance Regulation or out of compliance with any other state
339	law or rule as a result of granting any exceptions pursuant to
340	this subsection.
341	(5)  A rate filing that uses credit reports or credit
342	scores must comply with the requirements of s. 627.062 or s.
343	627.0651 to ensure that rates are not excessive, inadequate, or
344	unfairly discriminatory.
345	(6)  An insurer that requests or uses credit reports and
346	credit scoring in its underwriting and rating methods shall
347	maintain and adhere to established written procedures that
348	reflect the restrictions set forth in the federal Fair Credit
349	Reporting Act, this section, and all rules related thereto.
350	(7)(a)  An insurer shall establish procedures to review the
351	credit history of an insured who was adversely affected by the
352	use of the insured's credit history at the initial rating of the
353	policy, or at a subsequent renewal thereof. This review must be
354	performed at a minimum of once every 2 years or at the request
355	of the insured, whichever is sooner, and the insurer shall
356	adjust the premium of the insured to reflect any improvement in
357	the credit history. The procedures must provide that, with
358	respect to existing policyholders, the review of a credit report
359	will not be used by the insurer to cancel, refuse to renew, or
360	require a change in the method of payment or payment plan.
361	(b)  However, as an alternative to the requirements of
362	paragraph (a), an insurer that used a credit report or credit
363	score for an insured upon inception of a policy, who will not
364	use a credit report or score for reunderwriting, shall
365	reevaluate the insured within the first 3 years after inception,
366	based on other allowable underwriting or rating factors,
367	excluding credit information if the insurer does not increase
368	the rates or premium charged to the insured based on the
369	exclusion of credit reports or credit scores.
370	(8)  The commission may adopt rules to administer this
371	section. The rules may include, but need not be limited to:
372	(a)  Information that must be included in filings to
373	demonstrate compliance with subsection (3).
374	(b)  Statistical detail that insurers using credit reports
375	or scores under subsection (5) must retain and report annually
376	to the Office of Insurance Regulation.
377	(c)  Standards that ensure that rates or premiums
378	associated with the use of a credit report or score are not
379	unfairly discriminatory, based upon race, color, religion,
380	marital status, age, gender, income, national origin, or place
381	of residence.
382	(d)  Standards for review of models, methods, programs, or
383	any other process by which to grade or rank credit report data
384	and which may produce credit scores in order to ensure that the
385	insurer demonstrates that such grading, ranking, or scoring is
386	valid in predicting insurance risk of an applicant or insured.
387	Section 3.  This act shall take effect July 1, 2009.

CODING: Words stricken are deletions; words underlined are additions.