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HF 47

as introduced - 88th Legislature (2013 - 2014) Posted on 01/10/2013 12:14pm

KEY: stricken = removed, old language. underscored = added, new language.

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A bill for an act
relating to insurance; prohibiting the use of consumer credit scores or history by
insurers in underwriting automobile insurance policies;amending Minnesota
Statutes 2012, sections 72A.20, subdivision 36; 72A.499, subdivision 1;
72A.501, subdivision 2.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2012, section 72A.20, subdivision 36, is amended to read:


Subd. 36.

Limitations on the use of credit information.

(a) No insurer or group of
affiliated insurers may reject, cancel, or nonrenew a policy of private passenger motor
vehicle insurance as defined under section 65B.01 or a policy of homeowner's insurance
as defined under section 65A.27, for any person in whole or in part on the basis of credit
information, including a credit reporting product known as a "credit score" or "insurance
score,." without consideration and inclusion of any other applicable underwriting factor.

(b) If credit information, credit scoring, or insurance scoring is to be used in
underwriting, the insurer must disclose to the consumer that credit information will be
obtained and used as part of the insurance underwriting process.

(c) Insurance inquiries and non-consumer-initiated inquiries must not be used as part
of the credit scoring or insurance scoring process.

(d) If a credit score, insurance score, or other credit information relating to a
consumer, with respect to the types of insurance referred to in paragraph (a), is adversely
impacted or cannot be generated because of the absence of a credit history, the insurer
must exclude the use of credit as a factor in the decision to reject, cancel, or nonrenew.

(e) Insurers must upon the request of a policyholder reevaluate the policyholder's
score. Any change in premium resulting from the reevaluation must be effective upon
the renewal of the policy. An insurer is not required to reevaluate a policyholder's score
pursuant to this paragraph more than twice in any given calendar year.

(f) Insurers must upon request of the applicant or policyholder provide reasonable
underwriting exceptions based upon prior credit histories for persons whose credit
information is unduly influenced by expenses related to a catastrophic injury or illness,
temporary loss of employment, or the death of an immediate family member. The insurer
may require reasonable documentation of these events prior to granting an exception.

(g) A credit scoring or insurance scoring methodology must not be used by an
insurer if the credit scoring or insurance scoring methodology incorporates the gender,
race, nationality, or religion of an insured or applicant.

(h) Insurers that employ a credit scoring or insurance scoring system in underwriting
of coverage described in paragraph (a) must have on file with the commissioner:

(1) the insurer's credit scoring or insurance scoring methodology; and

(2) information that supports the insurer's use of a credit score or insurance score as
an underwriting criterion.

(i) Insurers described in paragraph (h) shall file the required information with the
commissioner within 120 days of August 1, 2002, or prior to implementation of a credit
scoring or insurance scoring system by the insurer, if that date is later.

(j) Information provided by, or on behalf of, an insurer to the commissioner under
this subdivision is trade secret information under section 13.37.

Sec. 2.

Minnesota Statutes 2012, section 72A.499, subdivision 1, is amended to read:


Subdivision 1.

Notice and information.

(a) In the event of an adverse underwriting
decision, the insurer or insurance agent responsible for the decision shall provide in
writing to the applicant, policyholder, or individual proposed for coverage:

(1) the specific reason or reasons for the adverse underwriting decision, a summary
of the person's rights under sections 72A.497 and 72A.498, and that upon request the
person may receive the specific items of personal information that support those reasons
and the specific sources of the information; or

(2) the specific reason or reasons for the adverse underwriting decision, the specific
items of personal and privileged information that support those reasons, the names and
addresses of the sources that supplied the specific items of information specified, and a
summary of the rights established under sections 72A.497 and 72A.498.

(b) In addition to the requirements of paragraph (a), if the adverse underwriting
decision is either solely or partially based upon a report of creditworthiness, credit
standing, or credit capacity that an insurer receives from a consumer reporting agency,
the insurer or insurance agent responsible for the decision shall provide in writing to the
applicant, policyholder, or individual proposed for coverage the primary reason or reasons
for the credit score or other credit based information used by the insurer in the insurer's
adverse underwriting decision.

Sec. 3.

Minnesota Statutes 2012, section 72A.501, subdivision 2, is amended to read:


Subd. 2.

Application.

(a) If the authorization is signed to collect information in
connection with an application for a property and casualty insurance policy, a policy
reinstatement, or a request for a change in benefits, the authorization is valid as long as
the individual is continually insured with the insurer. At each renewal of the policy, the
insurer must notify the insured in writing of the contents of the authorization and that the
authorization remains in effect unless revoked.

(b) If the authorization is signed to collect information in connection with an
application for a life, disability, and health insurance policy or contract, reinstatement,
or request for change in benefits, the authorization is valid as long as the individual is
continually insured with the insurer. At each renewal of the policy, the insurer must
notify the insured in writing of the contents of the authorization and that the authorization
remains in effect unless revoked.

(c) This section and section 72A.502, subdivisions 1 and 12, do not apply to the
collection and use of a numeric product referred to as an insurance score or credit score
that is used by a licensed insurance agent or insurer exclusively for the purpose of
underwriting or rating an insurance policy, if the agent or insurer informs the policyholder
or prospective policyholder requesting the insurance coverage that an insurance score or
credit score will be obtained for the purpose of underwriting or rating the policy.

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