Chapter 316
2003 --
H 5362 SUBSTITUTE A
Enacted 07/17/03
AN ACT
RELATING
TO INSURANCE
Introduced
By: Representatives Kennedy, Lewiss, E Coderre, Schadone, and Winfield
Date
Introduced: February 04, 2003
It is
enacted by the General Assembly as follows:
SECTION
1. Section 27-6-53 of the General Laws in Chapter 27-6 entitled "Fire and
Marine
Insurance Rating" is hereby amended to read as follows:
27-6-53.
Use of credit rating. -- (a) An insurer may use insurance scoring for
rating and
underwriting
of homeowners' insurance only under the following conditions:
(1) The insurer demonstrates the predictive nature of their insurance score to
the
insurance
division.
(2) An insurer shall, once every two (2) years if requested by an existing
customer,
obtain
an updated insurance score for the customer. If, after obtaining the insurance
score, the
customer
has improved his, her or its credit rating, the user of the information shall
afford the
customer
any decrease in rates that are available due to the improved rating. The user
may not
increase
the rate of an existing customer based solely on a worsening in the customer's
insurance
score
unless: (i) the worsening is due to a bankruptcy, tax lien, garnishment,
foreclosure or
judgment;
or (ii) if a subsequent insurance score no sooner than six (6) months later
confirms the
worsening
in score. Should an existing customer’s score change as the result of an
updated credit
report,
the decrease or increase in rates must be done at renewal subject to conditions
established
herein.
(3) An insurer shall not decline insurance for a new customer based solely on
an
insurance
score, or absence of an insurance score; and an insurer shall not cancel,
nonrenew or
increase
the rate of an existing customer based solely on a worsening in a customer's
insurance
score
unless: (i) the worsening is due to a bankruptcy, tax lien, garnishment,
foreclosure or
judgment;
or (ii) if a subsequent insurance score no sooner than six (6) months later
confirms the
worsening
in score. Should an existing customer’s score change as the result of an
updated credit
report,
the decrease or increase in rates must be done at renewal subject to conditions
established
herein.
(4) No insurer is obligated to obtain a current credit report or insurance
score for an
insured
if: the insured is in the most favorably-priced tier of the insurer, within a
group of
affiliated
insures; or credit was not used for the insured when the policy was initially
written.
However,
the insurer shall have the discretion to use credit for the insured upon
renewal, if
consistent
with its underwriting guidelines. The user may not increase the rate of an
existing
customer
based solely on a worsening in the customer's insurance score unless: (i) the
worsening
is
due to a bankruptcy, tax lien, garnishment, foreclosure or judgment; or (ii) if
a subsequent
insurance
score no sooner than six (6) months later confirms the worsening in score. Should
an
existing
customer’s score change as the result of an updated credit report, the decrease
or increase
in
rates must be done at renewal subject to conditions established herein.
(5) If a credit bureau determines that disputed information is inaccurate or
incorrect and
that
information was used in determining an insurance score which resulted in a
denial,
cancellation
or nonrenewal of or higher premiums or less favorable policy terms for a consumer,
the
insurer shall, within thirty (30) days of receiving notice of correction,
reissue or re-rate the
policy
by refunding the amount of the overpayment of premium based on the corrected
insurance
score
retroactive to the shorter of the last twelve (12) months of coverage or the
actual period of
coverage.
An "insurance score" as used in this section shall be defined as a
number or rating that
is
derived from an algorithm, computer application, model or other process that is
based in whole
or in
part on credit history.
(b) Agents shall be held harmless by insurers for all acts, efforts and
disclosures in
obtaining
an insurance score on the insurer's behalf. The commissioner is authorized and
empowered
to establish rules and regulations to carry out the provisions of this section
and to
fulfill
the goals of this section.
(c)
Notwithstanding the above, an insurer authorized to do business in Rhode Island
that
uses
credit information to underwrite or rate risks, shall not use the following as
a negative factor
in
any insurance scoring methodology or in reviewing credit information for the
purpose of
underwriting
or rating a policy of personal insurance:
(1)
Credit inquiries not initiated by the consumer or inquiries requested by the
consumer
for
his or her own credit information;
(2)
Inquiries relating to insurance coverage, if so identified on a consumer’s
credit report;
(3)
Collection accounts with a medical industry code, if so identified on the
consumer’s
credit
report;
(4)
Multiple lender inquiries, if coded by the consumer reporting agency on the
consumer’s
credit report as being from the home mortgage industry and made within thirty
(30)
days
of one another, unless only one inquiry is considered;
(5)
Multiple lender inquiries, if coded by the consumer reporting agency on the
consumer’s
credit report as being from the automobile lending industry and made within
thirty
(30)
days of one another, unless only one inquiry is considered.
(d)
No consumer reporting agency shall provide or sell data or lists that include
any
information
that in whole or in part was submitted in conjunction with an insurance inquiry
about
a consumer’s
credit information or a request for a credit report or insurance score. Such
information
includes, but is not limited to, the expiration dates of an insurance policy or
any other
information
that may identify time periods during which a consumer’s insurance may expire
and
the
terms and conditions of the consumer’s insurance coverage.
(e)
The restrictions provided in subsection (d) of this section do not apply to
data or lists
the
consumer reporting agency supplies to the insurance [agent/producer] from whom
information
was received, the insurer on who’s behalf such [agent/producer] acted, or such
insurer’s
affiliates or holding companies.
(f)
Nothing in this section shall be construed to restrict any insurer from being
able to
obtain
a claims history report or a motor vehicle report.
SECTION
2. Section 27-9-56 of the General Laws in Chapter 27-9 entitled "Casualty
Insurance
Rating" is hereby amended to read as follows:
27-9-56.
Use of credit rating. -- (a) An insurer may use insurance scoring for
rating and
underwriting
policies of personal motor vehicle insurance only under the following
conditions:
(1) The insurer demonstrates the predictive nature of their insurance score to
the
insurance
division.
(2) An insurer shall, once every two (2) years if requested by an existing
customer,
obtain
an updated insurance score for the customer. If, after obtaining the insurance
score, the
customer
has improved his, her or its credit rating, the user of the information shall
afford the
customer
any decrease in rates that are available due to the improved rating. The user
may not
increase
the rate of an existing customer based solely on a worsening in the customer's
insurance
score
unless: (i) the worsening is due to a bankruptcy, tax lien, garnishment,
foreclosure or
judgment;
or (ii) if a subsequent insurance score no sooner than six (6) months later
confirms the
worsening
in score. Should an existing customer’s score change as the result of an
updated credit
report,
the decrease or increase in rates must be done at renewal subject to conditions
established
herein.
(3) An insurer shall not decline insurance for a new customer based solely on
an
insurance
score, or absence of an insurance score; and an insurer shall not cancel,
non-renew or
increase
the rate of an existing customer based solely on a worsening in a customer's
insurance
score
unless: (i) the worsening is due to a bankruptcy, tax lien, garnishment,
foreclosure or
judgment;
or (ii) if a subsequent insurance score no sooner than six (6) months later
confirms the
worsening
in score. Should an existing customer’s score change as the result of an
updated credit
report,
the decrease or increase in rates must be done at renewal subject to conditions
established
herein.
(4) No insurer is obligated to obtain a current credit report or insurance
score for an
insured
if: the insured is in the most favorably-priced tier of the insurer, within a
group of
affiliated
insurers; or credit was not used for the insured when the policy was initially
written.
However,
the insurer shall have the discretion to use credit for the insured upon
renewal, if
consistent
with its underwriting guidelines. The user may not increase the rate of an
existing
customer
based solely on a worsening in the customer's insurance score unless: (i) the
worsening
is
due to a bankruptcy, tax lien, garnishment, foreclosure or judgment; or (ii) if
a subsequent
insurance
score no sooner than six (6) months later confirms the worsening in score. Should
an
existing
customer’s score change as the result of an updated credit report, the decrease
or increase
in
rates must be done at renewal subject to conditions established herein.
(5) If a credit bureau determines that disputed information is inaccurate or
incorrect and
such
information was used in determining an insurance score which resulted in a
denial,
cancellation
or nonrenewal of or higher premiums or less favorable policy terms for a
consumer,
the
insurer shall, within thirty (30) days of receiving notice of correction,
reissue or re-rate the
policy
by refunding the amount of the overpayment of premium based on the corrected
insurance
score
retroactive to the shorter of the last twelve (12) months of coverage or the
actual period of
coverage.
An "insurance score" as used in this section shall be defined as a
number or rating that
is
derived from an algorithm, computer application, model or other process that is
based in whole
or in
part on credit history.
(b) Agents shall be held harmless by insurers for all acts, efforts and
disclosures in
obtaining
an insurance score on the insurer's behalf. The commissioner is authorized and
empowered
to establish rules and regulations to carry out the provisions of this section
and to
fulfill
the goals of this section.
(c)
Notwithstanding the above, an insurer authorized to do business in Rhode Island
that
uses
credit information to underwrite or rate risks, shall not use the following as
a negative factor
in
any insurance scoring methodology or in reviewing credit information for the
purpose of
underwriting
or rating a policy of personal insurance:
(1)
Credit inquiries not initiated by the consumer or inquiries requested by the
consumer
for
his or her own credit information;
(2)
Inquiries relating to insurance coverage, if so identified on a consumer’s
credit report;
(3)
Collection accounts with a medical industry code, if so identified on the
consumer’s
credit
report;
(4)
Multiple lender inquiries, if coded by the consumer reporting agency on the
consumer’s
credit report as being from the home mortgage industry and made within thirty
(30)
days
of one another, unless only one inquiry is considered;
(5)
Multiple lender inquiries, if coded by the consumer reporting agency on the
consumer’s
credit report as being from the automobile lending industry and made within
thirty
(30)
days of one another, unless only one inquiry is considered.
(d)
No consumer reporting agency shall provide or sell data or lists that include
any
information
that in whole or in part was submitted in conjunction with an insurance inquiry
about
a
consumer’s credit information or a request for a credit report or insurance
score. Such
information
includes, but is not limited to, the expiration dates of an insurance policy or
any other
information
that may identify time periods during which a consumer’s insurance may expire
and
the
terms and conditions of the consumer’s insurance coverage.
(e)
The restrictions provided in subsection (d) of this section do not apply to
data or lists
the
consumer reporting agency supplies to the insurance [agent/producer] from whom
information
was received, the insurer on who’s behalf such [agent/producer] acted, or such
insurer’s
affiliates or holding companies.
(f)
Nothing in this section shall be construed to restrict any insurer from being
able to
obtain
a claims history report or a motor vehicle report.
SECTION 3. This act shall take effect on January 4, 2004.
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LC00661/SUB
A
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