House File 219 - Introduced HOUSE FILE 219 BY J. TAYLOR A BILL FOR An Act prohibiting the use of credit information to underwrite 1 or rate risks for private passenger automobile insurance, 2 providing penalties, and including effective and 3 applicability date provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 2115YH (7) 84 av/nh

H.F. 219 Section 1. Section 507B.4, Code 2011, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 13A. Use of credit information for private 3 passenger automobile insurance. Any violation of section 4 515.103, subsection 2A. 5 Sec. 2. Section 515.103, subsection 1, paragraph j, Code 6 2011, is amended to read as follows: 7 j. “Personal insurance” means personal insurance and not 8 commercial insurance and is limited to private passenger 9 automobile, homeowners, farm owners, personal farm liability, 10 motorcycle, mobile home owners, noncommercial dwelling fire, 11 boat, personal watercraft, snowmobile, and recreational vehicle 12 insurance policies, that are individually underwritten for 13 personal, family, farm, or household use. No other type of 14 insurance is included as personal insurance for the purposes of 15 this section . 16 Sec. 3. Section 515.103, Code 2011, is amended by adding the 17 following new subsection: 18 NEW SUBSECTION . 2A. Private passenger automobile insurance 19 —— use of credit information prohibited. 20 a. An insurer authorized to do business in Iowa shall not 21 use credit information to underwrite or rate risks for private 22 passenger automobile insurance that is personal insurance and 23 not commercial insurance and that is limited to such insurance 24 policies that are individually underwritten for personal, 25 family, farm, or household use. This prohibition includes but 26 is not limited to doing any of the following: 27 (1) Using an insurance score. 28 (2) Denying issuance, canceling, or refusing to renew a 29 policy of private passenger automobile insurance based on any 30 consideration of credit information. 31 (3) Basing a consumer’s renewal rates for private 32 passenger automobile insurance on any consideration of credit 33 information. 34 (4) Taking adverse action against a consumer based on any 35 -1- LSB 2115YH (7) 84 av/nh 1/ 3

H.F. 219 consideration of the fact that the consumer does not have a 1 credit card account. 2 (5) Considering an absence of credit information or an 3 inability to calculate an insurance score in underwriting or 4 rating private passenger automobile insurance. 5 (6) Taking adverse action against a consumer based on credit 6 information. 7 (7) Using any of the following as a negative factor in any 8 methodology used for the purpose of underwriting or rating a 9 private passenger automobile insurance policy: 10 (a) Credit inquiries not initiated by the consumer or 11 inquiries requested by the consumer for the consumer’s own 12 credit information. 13 (b) Inquiries relating to insurance coverage, if so 14 identified on a consumer’s credit report. 15 (c) Collection accounts with a medical industry code, if so 16 identified on a consumer’s credit report. 17 (d) Multiple lender inquiries, if coded by a consumer 18 reporting agency on the consumer’s credit report as being from 19 the home mortgage industry and made within thirty days of one 20 another, unless only one inquiry is considered. 21 (e) Multiple lender inquiries, if coded by a consumer 22 reporting agency on the consumer’s credit report as being from 23 the automobile lending industry and made within thirty days of 24 one another, unless only one inquiry is considered. 25 b. A violation of this subsection is an unfair or deceptive 26 act or practice in the business of insurance as provided in 27 chapter 507B. 28 Sec. 4. EFFECTIVE DATE AND APPLICABILITY. This Act takes 29 effect October 1, 2011, and applies to private passenger 30 automobile insurance policies delivered, issued for delivery, 31 continued, or renewed in this state on or after that date. 32 EXPLANATION 33 This bill prohibits the use of credit information to 34 underwrite or rate risks for private passenger automobile 35 -2- LSB 2115YH (7) 84 av/nh 2/ 3

H.F. 219 insurance that is personal insurance and not commercial 1 insurance and that is individually underwritten for personal, 2 family, farm, or household use. For the purposes of the bill, 3 “credit information” means any information related to credit 4 that is contained in or derived from a credit report, or 5 provided in an application for personal insurance. Information 6 that is not related to credit is not considered “credit 7 information” regardless of whether the information is contained 8 in or derived from a credit report or an application for credit 9 or is used to calculate an insurance score. 10 The bill provides that credit information cannot be used 11 to underwrite or rate risks for private passenger automobile 12 insurance, including but not limited to using an insurance 13 score; denying issuance, canceling, or refusing to renew such 14 insurance based on credit information; basing renewal rates on 15 credit information; taking adverse action against a consumer 16 based on the fact that the consumer has no credit card account; 17 considering an absence of credit information; taking adverse 18 action against a consumer based on credit information; and 19 using certain information contained in a credit report as a 20 negative factor in any methodology for underwriting or rating 21 risks. 22 A violation of the provisions of the bill is an unfair or 23 deceptive act or practice in the business of insurance as 24 provided in Code chapter 507B and the proceedings, orders, and 25 penalties contained in Code chapter 507B are applicable to 26 violations of the provisions of the bill. 27 The bill takes effect October 1, 2011, and is applicable 28 to private passenger automobile insurance policies delivered, 29 issued for delivery, continued, or renewed in this state on or 30 after that date. 31 Currently, credit information can be used by an insurer 32 to underwrite or rate risks for private passenger automobile 33 insurance under certain specified circumstances contained in 34 Code section 515.103(2). 35 -3- LSB 2115YH (7) 84 av/nh 3/ 3