1.1 	A bill for an act
1.2 	relating to insurance; prohibiting credit scoring for
1.3 	automobile and homeowner's insurance; amending
1.4 	Minnesota Statutes 2004, section 72A.20, subdivision
1.5 	36.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2004, section 72A.20,
1.8 	subdivision 36, is amended to read:
1.9 		Subd. 36.limitations prohibition on the use of credit
1.10 	information.  (a) No insurer or group of affiliated insurers may
1.11 	reject an application for, or renew,cancel, or nonrenew a
1.12 	policy of private passenger motor vehicle insurance as defined
1.13 	under section 65B.01 or a policy of homeowner's insurance as
1.14 	defined under section 65A.27, for any person in whole or in part
1.15 	on the basis of credit information, including a credit reporting
1.16 	product known as a "credit score" or "insurance score,." without
1.17 	consideration and inclusion of any other applicable underwriting
1.18 	factor.
1.19 	(b) If Credit information, credit scoring, or insurance
1.20 	scoring is to must not be used in underwriting, the insurer must
1.21 	disclose to the consumer that credit information will be
1.22 	obtained and used as part of the insurance underwriting
1.23 	process including the determination of premium rates.
1.24 	(c) Insurance inquiries and non-consumer-initiated
1.25 	inquiries must not be used as part of the credit scoring or
2.1 	insurance scoring process.
2.2 	(d) If a credit score, insurance score, or other credit
2.3 	information relating to a consumer, with respect to the types of
2.4 	insurance referred to in paragraph (a), is adversely impacted or
2.5 	cannot be generated because of the absence of a credit history,
2.6 	the insurer must exclude the use of credit as a factor in the
2.7 	decision to reject, cancel, or nonrenew.
2.8 	(e) Insurers must upon request of the applicant or
2.9 	policyholder provide reasonable underwriting exceptions based
2.10 	upon prior credit histories for persons whose credit information
2.11 	is unduly influenced by expenses related to a catastrophic
2.12 	injury or illness, temporary loss of employment, or the death of
2.13 	an immediate family member.  The insurer may require reasonable
2.14 	documentation of these events prior to granting an exception.
2.15 	(f) A credit scoring or insurance scoring methodology must
2.16 	not be used by an insurer if the credit scoring or insurance
2.17 	scoring methodology incorporates the gender, race, nationality,
2.18 	or religion of an insured or applicant.
2.19 	(g) Insurers that employ a credit scoring or insurance
2.20 	scoring system in underwriting of coverage described in
2.21 	paragraph (a) must have on file with the commissioner:
2.22 	(1) the insurer's credit scoring or insurance scoring
2.23 	methodology; and 
2.24 	(2) information that supports the insurer's use of a credit
2.25 	score or insurance score as an underwriting criterion.
2.26 	(h) Insurers described in paragraph (g) shall file the
2.27 	required information with the commissioner within 120 days of
2.28 	August 1, 2002, or prior to implementation of a credit scoring
2.29 	or insurance scoring system by the insurer, if that date is
2.30 	later.
2.31 	(i) Information provided by, or on behalf of, an insurer to
2.32 	the commissioner under this subdivision is trade secret
2.33 	information under section 13.37.

2.34 	Sec. 2. EFFECTIVE DATE; APPLICATION.
 2.35 	Section 1 is effective August 1, 2005, and applies to
2.36 	applications for policies received, and to renewals,
3.1 	cancellations, and nonrenewals effective, on or after that date.