SECOND REGULAR SESSION

HOUSE COMMITTEE SUBSTITUTE FOR

HOUSE BILL NOS. 1502 & 1821

91ST GENERAL ASSEMBLY

TED WEDEL, Chief Clerk

3806L.02C

AN ACT

To amend chapter 375, RSMo, by adding thereto one new section relating to credit information used in insurance underwriting.

Section A. Chapter 375, RSMo, is amended by adding thereto one new section, to be known as section 375.918, to read as follows:

375.918. 1. As used in this section, the following terms mean:

(1) "Adverse action", a denial, nonrenewal of, or a reduction in the amount of benefits payable or types of coverages under any contract, existing or applied for, in connection with the underwriting of insurance. An offer by an insurer to write a contract through an affiliated insurer does not constitute an adverse action;

(2) "Contract", any automobile insurance policy as defined in section 379.110, RSMo, or any property insurance policy as defined in section 375.001. Contract shall not include any policy of commercial insurance;

(3) "Credit report", any written or electronic communication of any information by a consumer reporting agency that:

(a) Bears on a person's credit worthiness, credit standing, or credit capacity; and

(b) Is used or collected wholly or partly to serve as a factor in the underwriting of a contract;

(4) "Insurance score", the practice of quantifying the insurance risk a person presents using the person's attributes derived from a credit report or credit information in a formula to assess insurance risk on an actuarial statistical basis;

(5) "Insurer", any insurance company or entity that offers a contract;

(6) "Underwriting", the selection of the risk that will be assumed by the insurer on a contract, and specifically the decision whether to accept, deny, renew, nonrenew, reduce, or increase the amount of benefits payable or types of coverages under the contract.

2. No insurer shall take an adverse action against an applicant or insured solely on the fact that the applicant or insured does not have an established credit rating, credit score or other evidence of credit-worthiness.

3. An insurer using a credit report or insurance score as a factor in underwriting shall not take an adverse action based on such factor without consideration of another underwriting factor.

4. An insurer using a credit report or insurance score as a factor in underwriting a contract shall disclose at the time of the original application for the contract or on the application itself that the insurer may gather credit information.

5. An insurer using a credit report or insurance score as a factor in underwriting of a contract shall not take an adverse action on such contract based on information that is the subject of a written dispute between the policyholder or applicant and a credit reporting agency, as noted in such person's credit report, until such dispute has reached final determination in accordance with the federal Fair Credit Reporting Act, 15 U.S.C. Section 1681, et. seq.

6. If the use of a credit report or insurance score on a contract results in an adverse action, the insurer shall provide the policyholder or applicant:

(1) Notice that a credit report or insurance score adversely affected the underwriting of the contract;

(2) The name, address, and telephone number of the consumer credit reporting agency that furnished the credit information, in compliance with the notice requirements of the federal Fair Credit Reporting Act, 15 U.S.C. Section 1681, et. seq.;

(3) Notice of the right to obtain a free credit report from the consumer credit reporting agency within sixty days; and

(4) Notice of the right to lodge a dispute with the consumer credit reporting agency to have any erroneous information corrected in accordance with the federal Fair Credit Reporting Act, 15 U.S.C. Section 1681, et. seq.

7. Upon written request by an applicant, an insured, or an insurance producer representing the applicant or insured, an insurer shall provide to the applicant or insured a listing of the primary factors in a credit report that negatively impacted the insurance score.

8. If an insurer or producer on behalf of an insurer bases an adverse action in part on a credit report or insurance score, the applicant or insured may request reevaluation for the purposes of determining entitlement to a more favorable action if new circumstances may result in a more favorable credit report or insurance score.

9. If an insurer has a renewal underwriting program to evaluate an insured's eligibility for continued coverage or continued placement in a tier that uses a credit report or insurance score, the insurer shall, at the time of renewal underwriting, obtain a current credit report or insurance score for each insured that is subject to the renewal underwriting program.

10. An insurer shall not use directly or indirectly the number of insurance inquiries made by a consumer as a negative factor in its insurance scoring formulas.

11. Nothing in this section shall be construed as superceding the provisions of section 375.002 and section 379.114, RSMo. Nothing in this section shall be construed as prohibiting any insurer from using credit information in determining whether to offer a policyholder or applicant the option to finance or establish a payment plan for the payment of any premium for a contract. Nothing in this section shall affect any entity that is not an insurer as defined in subsection 1 of this section.

12. Any entity that is involved in creating, compiling, or providing insurance scores to or on behalf of an insurer shall not provide or sell to any other party, other than the insurer, insurance company affiliates, or holding companies, or their producers information or mailing lists that include an insurance score or any other information that in whole or in part is generated or derived from credit inquiries of insureds or insurance applicants. Such information includes, but is not limited to, information that may identify time periods during which an applicant's or insured's insurance may expire or an estimated range where a person's insurance score may fall. Such provision shall not preclude the exchange of information specifically authorized under the federal Fair Credit Reporting Act, 15 U.S.C. Section 1681, et. seq. The provisions of this subsection shall not apply to information or mailing lists disclosed in connection with a proposed or actual sale, merger, transfer, or exchange of all or a portion of a business or operating unit, including but not limited to the sale of a portfolio of contracts, if such disclosure concerns solely consumers of the business or unit and such disclosure is not the primary reason for the sale, merger, transfer, or exchange.

13. The provisions of this section shall apply to all contracts entered into on or after January 1, 2003.

Missouri House of Representatives