HB 771

1	A bill to be entitled
2	An act relating to insurance; amending s. 626.9541, F.S.;
3	prohibiting an insurer that issues motor vehicle insurance
4	from using a rate, rating schedule, rating manual, or an
5	underwriting rule that is not contained in a rating manual
6	and is determined in whole or in part on the basis of
7	certain characteristics of an insured; including the
8	refusal to insure or continue to insure any individual or
9	risk because of educational level, trade, business,
10	occupation, profession, credit report, credit score, or
11	certain forms of lawful employment among the list of
12	activities constituting unfair methods of competition and
13	unfair or deceptive acts; amending s. 626.9741, F.S.;
14	prohibiting the use by insurers of credit reports and
15	credit scores in making rating determinations; deleting
16	provisions limiting and regulating the use of credit
17	scores by insurers when making rating determinations;
18	deleting the definitions of the terms "adverse decision"
19	and "tier"; deleting provisions authorizing the Financial
20	Services Commission to adopt rules; providing an effective
21	date.
22
23	Be It Enacted by the Legislature of the State of Florida:
24
25	Section 1.  Paragraphs (o) and (x) of subsection (1) of
26	section 626.9541, Florida Statutes, are amended to read:
27	626.9541  Unfair methods of competition and unfair or
28	deceptive acts or practices defined.-
29	(1)  UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
30	ACTS.-The following are defined as unfair methods of competition
31	and unfair or deceptive acts or practices:
32	(o)  Illegal dealings in premiums; excess or reduced
33	charges for insurance.-
34	1.  Knowingly collecting any sum as a premium or charge for
35	insurance, which is not then provided, or is not in due course
36	to be provided, subject to acceptance of the risk by the
37	insurer, by an insurance policy issued by an insurer as
38	permitted by this code.
39	2.  Knowingly collecting as a premium or charge for
40	insurance any sum in excess of or less than the premium or
41	charge applicable to such insurance, in accordance with the
42	applicable classifications and rates as filed with and approved
43	by the office, and as specified in the policy; or, in cases when
44	classifications, premiums, or rates are not required by this
45	code to be so filed and approved, premiums and charges collected
46	from a Florida resident in excess of or less than those
47	specified in the policy and as fixed by the insurer. This
48	provision does shall not be deemed to prohibit the charging and
49	collection, by surplus lines agents licensed under part VIII of
50	this chapter, of the amount of applicable state and federal
51	taxes, or fees as authorized by s. 626.916(4), in addition to
52	the premium required by the insurer or the charging and
53	collection, by licensed agents, of the exact amount of any
54	discount or other such fee charged by a credit card facility in
55	connection with the use of a credit card, as authorized by
56	subparagraph (q)3., in addition to the premium required by the
57	insurer. This subparagraph does shall not be construed to
58	prohibit collection of a premium for a universal life or a
59	variable or indeterminate value insurance policy made in
60	accordance with the terms of the contract.
61	3.a.  Imposing or requesting an additional premium for a
62	policy of motor vehicle liability, personal injury protection,
63	medical payment, or collision insurance or any combination
64	thereof or refusing to renew the policy solely because the
65	insured was involved in a motor vehicle accident unless the
66	insurer's file contains information from which the insurer in
67	good faith determines that the insured was substantially at
68	fault in the accident.
69	b.  An insurer that which imposes and collects such a
70	surcharge or which refuses to renew such policy shall, in
71	conjunction with the notice of premium due or notice of
72	nonrenewal, notify the named insured that he or she is entitled
73	to reimbursement of such amount or renewal of the policy under
74	the conditions listed below and will subsequently reimburse him
75	or her or renew the policy, if the named insured demonstrates
76	that the operator involved in the accident was:
77	(I)  Lawfully parked;
78	(II)  Reimbursed by, or on behalf of, a person responsible
79	for the accident or has a judgment against such person;
80	(III)  Struck in the rear by another vehicle headed in the
81	same direction and was not convicted of a moving traffic
82	violation in connection with the accident;
83	(IV)  Hit by a "hit-and-run" driver, if the accident was
84	reported to the proper authorities within 24 hours after
85	discovering the accident;
86	(V)  Not convicted of a moving traffic violation in
87	connection with the accident, but the operator of the other
88	automobile involved in such accident was convicted of a moving
89	traffic violation;
90	(VI)  Finally adjudicated not to be liable by a court of
91	competent jurisdiction;
92	(VII)  In receipt of a traffic citation which was dismissed
93	or nolle prossed; or
94	(VIII)  Not at fault as evidenced by a written statement
95	from the insured establishing facts demonstrating lack of fault
96	which are not rebutted by information in the insurer's file from
97	which the insurer in good faith determines that the insured was
98	substantially at fault.
99	c.  In addition to the other provisions of this
100	subparagraph, an insurer may not fail to renew a policy if the
101	insured has had only one accident in which he or she was at
102	fault within the current 3-year period. However, an insurer may
103	nonrenew a policy for reasons other than accidents in accordance
104	with s. 627.728. This subparagraph does not prohibit nonrenewal
105	of a policy under which the insured has had three or more
106	accidents, regardless of fault, during the most recent 3-year
107	period.
108	4.  Imposing or requesting an additional premium for, or
109	refusing to renew, a policy for motor vehicle insurance solely
110	because the insured committed a noncriminal traffic infraction
111	as described in s. 318.14 unless the infraction is:
112	a.  A second infraction committed within an 18-month
113	period, or a third or subsequent infraction committed within a
114	36-month period.
115	b.  A violation of s. 316.183, when such violation is a
116	result of exceeding the lawful speed limit by more than 15 miles
117	per hour.
118	5.  Upon the request of the insured, the insurer and
119	licensed agent shall supply to the insured the complete proof of
120	fault or other criteria that which justifies the additional
121	charge or cancellation.
122	6.  An No insurer may not shall impose or request an
123	additional premium for motor vehicle insurance, cancel or refuse
124	to issue a policy, or refuse to renew a policy because the
125	insured or the applicant is a handicapped or physically disabled
126	person, so long as such handicap or physical disability does not
127	substantially impair such person's mechanically assisted driving
128	ability.
129	7.  An No insurer may not cancel or otherwise terminate any
130	insurance contract or coverage, or require execution of a
131	consent to rate endorsement, during the stated policy term for
132	the purpose of offering to issue, or issuing, a similar or
133	identical contract or coverage to the same insured with the same
134	exposure at a higher premium rate or continuing an existing
135	contract or coverage with the same exposure at an increased
136	premium.
137	8.  An No insurer may not issue a nonrenewal notice on any
138	insurance contract or coverage, or require execution of a
139	consent to rate endorsement, for the purpose of offering to
140	issue, or issuing, a similar or identical contract or coverage
141	to the same insured at a higher premium rate or continuing an
142	existing contract or coverage at an increased premium without
143	meeting any applicable notice requirements.
144	9.  An No insurer may not shall, with respect to premiums
145	charged for motor vehicle insurance, unfairly discriminate
146	solely on the basis of age, sex, marital status, or scholastic
147	achievement.
148	10.  An insurer may not, with respect to premiums charged
149	for motor vehicle insurance, use any rate, rating schedule,
150	rating manual, or underwriting rule that is not contained in a
151	rating manual and that is determined in whole or in part on the
152	basis of any of the following as they relate to an insured:
153	a.  Educational level.
154	b.  Trade, business, occupation, profession, or any lawful
155	form of employment that does not directly involve the use of one
156	or more vehicles specifically insured or identified in the
157	insurance policy.
158	c.  Credit report or credit score as defined in s.
159	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 when adjudication has been withheld and no
172	points have 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 because of the individual's educational
179	level, trade, business, occupation, profession, any form of
180	lawful employment, or credit report or credit score as defined
181	in s. 626.9741, or solely because of:
182	1.  Race, color, creed, marital status, gender sex, or
183	national origin;
184	2.  The residence or, age, or lawful occupation of the
185	individual or the location of the risk, unless there is a
186	reasonable relationship between the residence or, age, or lawful
187	occupation of the individual or the location of the risk and the
188	coverage issued or to be issued;
189	3.  The insured's or applicant's failure to agree to place
190	collateral business with any insurer, unless the coverage
191	applied for would provide liability coverage which is excess
192	over that provided in policies maintained on property or motor
193	vehicles;
194	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	5.  The fact that the insured or applicant is a public
198	official; or
199	6.  The fact that the insured or applicant had been
200	previously refused insurance coverage by any insurer, when such
201	refusal to insure or continue to insure for this reason occurs
202	with such frequency as to indicate a general business practice.
203	Section 2.  Section 626.9741, Florida Statutes, is amended
204	to read:
205	626.9741  Use of credit reports and credit scores by
206	insurers.-An insurer may not use credit reports or credit scores
207	in making rating determinations. For purposes of this section,
208	the term:
209	(1)  The purpose of this section is to regulate and limit
210	the use of credit reports and credit scores by insurers for
211	underwriting and rating purposes. This section applies only to
212	personal lines motor vehicle insurance and personal lines
213	residential insurance, which includes homeowners, mobile home
214	owners' dwelling, tenants, condominium unit owners, cooperative
215	unit owners, and similar types of insurance.
216	(2)  As used in this section, the term:
217	(a)  "Adverse decision" means a decision to refuse to issue
218	or renew a policy of insurance; to issue a policy with
219	exclusions or restrictions; to increase the rates or premium
220	charged for a policy of insurance; to place an insured or
221	applicant in a rating tier that does not have the lowest
222	available rates for which that insured or applicant is otherwise
223	eligible; or to place an applicant or insured with a company
224	operating under common management, control, or ownership which
225	does not offer the lowest rates available, within the affiliate
226	group of insurance companies, for which that insured or
227	applicant is otherwise eligible.
228	(1)(b)  "Credit report" means any written, oral, or other
229	communication of any information by a consumer reporting agency,
230	as defined in the federal Fair Credit Reporting Act, 15 U.S.C.
231	ss. 1681 et seq., bearing on a consumer's credit worthiness,
232	credit standing, or credit capacity, which is used or expected
233	to be used or collected as a factor to establish a person's
234	eligibility for credit or insurance, or any other purpose
235	authorized pursuant to the applicable provision of such federal
236	act. A credit score alone, as calculated by a credit reporting
237	agency or by or for the insurer, may not be considered a credit
238	report.
239	(2)(c)  "Credit score" means a score, grade, or value that
240	is derived by using any or all data from a credit report in any
241	type of model, method, or program, whether electronically, in an
242	algorithm, computer software or program, or any other process,
243	for the purpose of grading or ranking credit report data.
244	(d)  "Tier" means a category within a single insurer into
245	which insureds with substantially similar risk, exposure, or
246	expense factors are placed for purposes of determining rate or
247	premium.
248	(3)  An insurer must inform an applicant or insured, in the
249	same medium as the application is taken, that a credit report or
250	score is being requested for underwriting or rating purposes. An
251	insurer that makes an adverse decision based, in whole or in
252	part, upon a credit report must provide at no charge, a copy of
253	the credit report to the applicant or insured or provide the
254	applicant or insured with the name, address, and telephone
255	number of the consumer reporting agency from which the insured
256	or applicant may obtain the credit report. The insurer must
257	provide notification to the consumer explaining the reasons for
258	the adverse decision. The reasons must be provided in
259	sufficiently clear and specific language so that a person can
260	identify the basis for the insurer's adverse decision. Such
261	notification shall include a description of the four primary
262	reasons, or such fewer number as existed, which were the primary
263	influences of the adverse decision. The use of generalized terms
264	such as "poor credit history," "poor credit rating," or "poor
265	insurance score" does not meet the explanation requirements of
266	this subsection. A credit score may not be used in underwriting
267	or rating insurance unless the scoring process produces
268	information in sufficient detail to permit compliance with the
269	requirements of this subsection. It shall not be deemed an
270	adverse decision if, due to the insured's credit report or
271	credit score, the insured continues to receive a less favorable
272	rate or placement in a less favorable tier or company at the
273	time of renewal except for renewals or reunderwriting required
274	by this section.
275	(4)(a)  An insurer may not request a credit report or score
276	based upon the race, color, religion, marital status, age,
277	gender, income, national origin, or place of residence of the
278	applicant or insured.
279	(b)  An insurer may not make an adverse decision solely
280	because of information contained in a credit report or score
281	without consideration of any other underwriting or rating
282	factor.
283	(c)  An insurer may not make an adverse decision or use a
284	credit score that could lead to such a decision if based, in
285	whole or in part, on:
286	1.  The absence of, or an insufficient, credit history, in
287	which instance the insurer shall:
288	a.  Treat the consumer as otherwise approved by the Office
289	of Insurance Regulation if the insurer presents information that
290	such an absence or inability is related to the risk for the
291	insurer;
292	b.  Treat the consumer as if the applicant or insured had
293	neutral credit information, as defined by the insurer;
294	c.  Exclude the use of credit information as a factor and
295	use only other underwriting criteria;
296	2.  Collection accounts with a medical industry code, if so
297	identified on the consumer's credit report;
298	3.  Place of residence; or
299	4.  Any other circumstance that the Financial Services
300	Commission determines, by rule, lacks sufficient statistical
301	correlation and actuarial justification as a predictor of
302	insurance risk.
303	(d)  An insurer may use the number of credit inquiries
304	requested or made regarding the applicant or insured except for:
305	1.  Credit inquiries not initiated by the consumer or
306	inquiries requested by the consumer for his or her own credit
307	information.
308	2.  Inquiries relating to insurance coverage, if so
309	identified on a consumer's credit report.
310	3.  Collection accounts with a medical industry code, if so
311	identified on the consumer's credit report.
312	4.  Multiple lender inquiries, if coded by the consumer
313	reporting agency on the consumer's credit report as being from
314	the home mortgage industry and made within 30 days of one
315	another, unless only one inquiry is considered.
316	5.  Multiple lender inquiries, if coded by the consumer
317	reporting agency on the consumer's credit report as being from
318	the automobile lending industry and made within 30 days of one
319	another, unless only one inquiry is considered.
320	(e)  An insurer must, upon the request of an applicant or
321	insured, provide a means of appeal for an applicant or insured
322	whose credit report or credit score is unduly influenced by a
323	dissolution of marriage, the death of a spouse, or temporary
324	loss of employment. The insurer must complete its review within
325	10 business days after the request by the applicant or insured
326	and receipt of reasonable documentation requested by the
327	insurer, and, if the insurer determines that the credit report
328	or credit score was unduly influenced by any of such factors,
329	the insurer shall treat the applicant or insured as if the
330	applicant or insured had neutral credit information or shall
331	exclude the credit information, as defined by the insurer,
332	whichever is more favorable to the applicant or insured. An
333	insurer shall not be considered out of compliance with its
334	underwriting rules or rates or forms filed with the Office of
335	Insurance Regulation or out of compliance with any other state
336	law or rule as a result of granting any exceptions pursuant to
337	this subsection.
338	(5)  A rate filing that uses credit reports or credit
339	scores must comply with the requirements of s. 627.062 or s.
340	627.0651 to ensure that rates are not excessive, inadequate, or
341	unfairly discriminatory.
342	(6)  An insurer that requests or uses credit reports and
343	credit scoring in its underwriting and rating methods shall
344	maintain and adhere to established written procedures that
345	reflect the restrictions set forth in the federal Fair Credit
346	Reporting Act, this section, and all rules related thereto.
347	(7)(a)  An insurer shall establish procedures to review the
348	credit history of an insured who was adversely affected by the
349	use of the insured's credit history at the initial rating of the
350	policy, or at a subsequent renewal thereof. This review must be
351	performed at a minimum of once every 2 years or at the request
352	of the insured, whichever is sooner, and the insurer shall
353	adjust the premium of the insured to reflect any improvement in
354	the credit history. The procedures must provide that, with
355	respect to existing policyholders, the review of a credit report
356	will not be used by the insurer to cancel, refuse to renew, or
357	require a change in the method of payment or payment plan.
358	(b)  However, as an alternative to the requirements of
359	paragraph (a), an insurer that used a credit report or credit
360	score for an insured upon inception of a policy, who will not
361	use a credit report or score for reunderwriting, shall
362	reevaluate the insured within the first 3 years after inception,
363	based on other allowable underwriting or rating factors,
364	excluding credit information if the insurer does not increase
365	the rates or premium charged to the insured based on the
366	exclusion of credit reports or credit scores.
367	(8)  The commission may adopt rules to administer this
368	section. The rules may include, but need not be limited to:
369	(a)  Information that must be included in filings to
370	demonstrate compliance with subsection (3).
371	(b)  Statistical detail that insurers using credit reports
372	or scores under subsection (5) must retain and report annually
373	to the Office of Insurance Regulation.
374	(c)  Standards that ensure that rates or premiums
375	associated with the use of a credit report or score are not
376	unfairly discriminatory, based upon race, color, religion,
377	marital status, age, gender, income, national origin, or place
378	of residence.
379	(d)  Standards for review of models, methods, programs, or
380	any other process by which to grade or rank credit report data
381	and which may produce credit scores in order to ensure that the
382	insurer demonstrates that such grading, ranking, or scoring is
383	valid in predicting insurance risk of an applicant or insured.
384	Section 3.  This act shall take effect July 1, 2010.

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