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.
23
24 Be It Enacted by the Legislature of the State of Florida:
25
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.—
30 (1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
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.