2013 -- S 0439

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LC01734

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

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A N A C T

RELATING TO INSURANCE -- CASUALTY INSURANCE RATING

     Introduced By: Senators Archambault, and Lombardi

     Date Introduced: February 28, 2013

     Referred To: Senate Corporations

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 27-9-56 of the General Laws in Chapter 27-9 entitled "Casualty

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Insurance Rating" is hereby amended to read as follows:

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     27-9-56. Use of credit rating. -- (a) An insurer may use insurance scoring for rating and

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underwriting policies of personal motor vehicle insurance only under the following conditions:

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      (1) The insurer demonstrates the predictive nature of their insurance score to the

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insurance division.

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      (2) An insurer shall, once every two (2) years if requested by an existing customer,

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obtain an updated insurance score for the customer. If, after obtaining the insurance score, the

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customer has improved his, her or its credit rating, the user of the information shall afford the

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customer any decrease in rates that are available due to the improved rating. The user may not

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increase the rate of an existing customer based solely on a worsening in the customer's insurance

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score unless: (i) the worsening is due to a bankruptcy, tax lien, garnishment, foreclosure or

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judgment; or (ii) if a subsequent insurance score no sooner than six (6) months later confirms the

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worsening in score. Should an existing customer's score change as the result of an updated credit

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report, the decrease or increase in rates must be done at renewal subject to conditions established

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herein.

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      (3) An insurer shall not decline insurance for a new customer based solely on an

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insurance score, or absence of an insurance score; and an insurer shall not cancel, non-renew or

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increase the rate of an existing customer based solely on a worsening in a customer's insurance

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score unless: (i) the worsening is due to a bankruptcy, tax lien, garnishment, foreclosure or

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judgment; or (ii) if a subsequent insurance score no sooner than six (6) months later confirms the

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worsening in score. Should an existing customer's score change as the result of an updated credit

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report, the decrease or increase in rates must be done at renewal subject to conditions established

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herein.

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      (4) No insurer is obligated to obtain a current credit report or an insurance score for an

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insured if: the insured is in the most favorably-priced tier of the insurer, within a group of

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affiliated insurers; or credit was not used for the insured when the policy was initially written.

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However, the insurer shall have the discretion to use credit for the insured upon renewal, if

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consistent with its underwriting guidelines. The user may not increase the rate of an existing

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customer based solely on a worsening in the customer's insurance score unless: (i) the worsening

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is due to a bankruptcy, tax lien, garnishment, foreclosure or judgment; or (ii) if a subsequent

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insurance score no sooner than six (6) months later confirms the worsening in score. Should an

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existing customer's score change as the result of an updated credit report, the decrease or increase

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in rates must be done at renewal subject to conditions established herein.

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      (5) If a credit bureau determines that disputed information is inaccurate or incorrect and

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such information was used in determining an insurance score which resulted in a denial,

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cancellation or nonrenewal of or higher premiums or less favorable policy terms for a consumer,

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the insurer shall, within thirty (30) days of receiving notice of correction, reissue or re-rate the

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policy by refunding the amount of the overpayment of premium based on the corrected insurance

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score retroactive to the shorter of the last twelve (12) months of coverage or the actual period of

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coverage. An "insurance score" as used in this section shall be defined as a number or rating that

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is derived from an algorithm, computer application, model or other process that is based in whole

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or in part on credit history.

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      (b) Agents shall be held harmless by insurers for all acts, efforts and disclosures in

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obtaining an insurance score on the insurer's behalf. The commissioner is authorized and

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empowered to establish rules and regulations to carry out the provisions of this section and to

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fulfill the goals of this section.

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      (c) Notwithstanding the above, an An insurer authorized to do business in Rhode Island

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shall not use a customer’s credit report that uses credit information to underwrite or rate risks,

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shall not use the following as a negative factor in any insurance scoring methodology or in

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reviewing credit information for the purpose of underwriting or rating a policy of personal

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insurance:

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      (1) Credit inquiries not initiated by the consumer or inquiries requested by the consumer

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for his or her own credit information;

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      (2) Inquiries relating to insurance coverage, if so identified on a consumer's credit report;

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      (3) Collection accounts with a medical industry code, if so identified on the consumer's

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credit report;

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      (4) Multiple lender inquiries, if coded by the consumer reporting agency on the

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consumer's credit report as being from the home mortgage industry and made within thirty (30)

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days of one another, unless only one inquiry is considered;

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      (5) Multiple lender inquiries, if coded by the consumer reporting agency on the

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consumer's credit report as being from the automobile lending industry and made within thirty

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(30) days of one another, unless only one inquiry is considered.

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      (d) No consumer reporting agency shall provide or sell data or lists that include any

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information that in whole or in part was submitted in conjunction with an insurance inquiry about

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a consumer's credit information or a request for a credit report or insurance score. Such

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information includes, but is not limited to, the expiration dates of an insurance policy or any other

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information that may identify time periods during which a consumer's insurance may expire and

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the terms and conditions of the consumer's insurance coverage.

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      (e) The restrictions provided in subsection (d) of this section do not apply to data or lists

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the consumer reporting agency supplies to the insurance [agent/producer]from whom information

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was received, the insurer on who's behalf such [agent/producer]acted, or such insurer's affiliates

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or holding companies.

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      (f) Nothing in this section shall be construed to restrict any insurer from being able to

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obtain a claims history report or a motor vehicle report.

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     SECTION 2. This act shall take effect upon passage.

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LC01734

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO INSURANCE -- CASUALTY INSURANCE RATING

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     This act would prohibit insurers from using credit ratings to underwrite or rate risks.

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     This act would take effect upon passage.

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LC01734

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