HOUSE FILE 219

BY  J. TAYLOR

A BILL FOR

An Act prohibiting the use of credit information to underwrite or rate risks for private passenger automobile insurance, providing penalties, and including effective and applicability date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

   Section 1.  Section 507B.4, Code 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  13A.  Use of credit information for private passenger automobile insurance.  Any violation of section 515.103, subsection 2A.
   Sec. 2.  Section 515.103, subsection 1, paragraph j, Code 2011, is amended to read as follows:
   j.  “Personal insurance” means personal insurance and not commercial insurance and is limited toprivate passenger automobile, homeowners, farm owners, personal farm liability, motorcycle, mobile home owners, noncommercial dwelling fire, boat, personal watercraft, snowmobile, and recreational vehicle insurance policies, that are individually underwritten for personal, family, farm, or household use. No other type of insurance is included as personal insurance for the purposes of this section.
   Sec. 3.  Section 515.103, Code 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  2A.  Private passenger automobile insurance —— use of credit information prohibited.
   a.  An insurer authorized to do business in Iowa shall not use credit information to underwrite or rate risks for private passenger automobile insurance that is personal insurance and not commercial insurance and that is limited to such insurance policies that are individually underwritten for personal, family, farm, or household use. This prohibition includes but is not limited to doing any of the following:
   (1)  Using an insurance score.
   (2)  Denying issuance, canceling, or refusing to renew a policy of private passenger automobile insurance based on any consideration of credit information.
   (3)  Basing a consumer’s renewal rates for private passenger automobile insurance on any consideration of credit information.
   (4)  Taking adverse action against a consumer based on any consideration of the fact that the consumer does not have a credit card account.
   (5)  Considering an absence of credit information or an inability to calculate an insurance score in underwriting or rating private passenger automobile insurance.
   (6)  Taking adverse action against a consumer based on credit information.
   (7)  Using any of the following as a negative factor in any methodology used for the purpose of underwriting or rating a private passenger automobile insurance policy:
   (a)  Credit inquiries not initiated by the consumer or inquiries requested by the consumer for the consumer’s own credit information.
   (b)  Inquiries relating to insurance coverage, if so identified on a consumer’s credit report.
   (c)  Collection accounts with a medical industry code, if so identified on a consumer’s credit report.
   (d)  Multiple lender inquiries, if coded by a consumer reporting agency on the consumer’s credit report as being from the home mortgage industry and made within thirty days of one another, unless only one inquiry is considered.
   (e)  Multiple lender inquiries, if coded by a consumer reporting agency on the consumer’s credit report as being from the automobile lending industry and made within thirty days of one another, unless only one inquiry is considered.
   b.  A violation of this subsection is an unfair or deceptive act or practice in the business of insurance as provided in chapter 507B.
   Sec. 4.  EFFECTIVE DATE AND APPLICABILITY.  This Act takes effect October 1, 2011, and applies to private passenger automobile insurance policies delivered, issued for delivery, continued, or renewed in this state on or after that date.
EXPLANATION
   This bill prohibits the use of credit information to underwrite or rate risks for private passenger automobile insurance that is personal insurance and not commercial insurance and that is individually underwritten for personal, family, farm, or household use. For the purposes of the bill, “credit information” means any information related to credit that is contained in or derived from a credit report, or provided in an application for personal insurance. Information that is not related to credit is not considered “credit information” regardless of whether the information is contained in or derived from a credit report or an application for credit or is used to calculate an insurance score.
   The bill provides that credit information cannot be used to underwrite or rate risks for private passenger automobile insurance, including but not limited to using an insurance score; denying issuance, canceling, or refusing to renew such insurance based on credit information; basing renewal rates on credit information; taking adverse action against a consumer based on the fact that the consumer has no credit card account; considering an absence of credit information; taking adverse action against a consumer based on credit information; and using certain information contained in a credit report as a negative factor in any methodology for underwriting or rating risks.
   A violation of the provisions of the bill is an unfair or deceptive act or practice in the business of insurance as provided in Code chapter 507B and the proceedings, orders, and penalties contained in Code chapter 507B are applicable to violations of the provisions of the bill.
   The bill takes effect October 1, 2011, and is applicable to private passenger automobile insurance policies delivered, issued for delivery, continued, or renewed in this state on or after that date.
   Currently, credit information can be used by an insurer to underwrite or rate risks for private passenger automobile insurance under certain specified circumstances contained in Code section 515.103(2).