Chapter 370

Chapter 370

2003 -- S 0137 SUBSTITUTE A

Enacted 07/17/03

 

AN ACT

RELATING TO INSURANCE

          

     Introduced By: Senators Bates, Walaska, Celona, Breene, and Blais

     Date Introduced: January 23, 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 customerís 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 customerís 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 customerís 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 consumerís credit report;

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

credit report;

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

consumerís 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

consumerís 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 consumerís 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 consumerís insurance may expire and

the terms and conditions of the consumerís 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 whoís behalf such [agent/producer] acted, or such

insurerís 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 customerís 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 customerís 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 customerís 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 consumerís credit report;

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

credit report;

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

consumerís 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

consumerís 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 consumerís 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 consumerís insurance may expire and

the terms and conditions of the consumerís 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 whoís behalf such [agent/producer] acted, or such

insurerís 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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LC00465/SUB A

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