Connecticut 2020 Regular Session

Connecticut House Bill HB05372 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
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3	3	LCO No. 1976 1 of 6
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5	5	General Assembly Raised Bill No. 5372
6	6	February Session, 2020
7	7	LCO No. 1976
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10	10	Referred to Committee on INSURANCE AND REAL ESTATE
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12	12
13	13	Introduced by:
14	14	(INS)
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19	19	AN ACT PROHIBITING INSURANCE COMPANIES F ROM USING
20	20	CREDIT HISTORY AS A FACTOR IN UNDERWRITING OR RATI NG
21	21	PRIVATE PASSENGER NO NFLEET AUTOMOBILE IN SURANCE
22	22	POLICIES.
23	23	Be it enacted by the Senate and House of Representatives in General
24	24	Assembly convened:
25	25
26	26	Section 1. Subdivisions (4) to (6), inclusive, of subsection (b) of section 1
27	27	38a-686 of the general statutes are repealed and the following is 2
28	28	substituted in lieu thereof (Effective October 1, 2020): 3
29	29	(4) (A) Each rating plan for private passenger nonfleet automobile 4
30	30	insurance that includes territorial classifications shall assign a weight of 5
31	31	seventy-five per cent to individual territorial loss cost indication and 6
32	32	twenty-five per cent to the state-wide average loss cost indication. 7
33	33	(B) An insurer shall not use an applicant's or insured's credit history 8
34	34	as a factor in underwriting or rating private passenger nonfleet 9
35	35	automobile insurance. 10
36	36	(5) Each rating plan shall establish appropriate eligibility criteria for 11
37	37	determining significant risks that are to qualify under the plan. Rating 12 Raised Bill No. 5372
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39	39
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41	41	LCO No. 1976 2 of 6
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43	43	plans that comply with the provisions of this subdivision shall be 13
44	44	deemed to produce rates that are not unfairly discriminatory. 14
45	45	(6) With respect to personal risk insurance other than private 15
46	46	passenger nonfleet automobile insurance, an insurer shall not use an 16
47	47	applicant's or insured's credit history as a factor in underwriting or 17
48	48	rating except in accordance with this subdivision. For the purposes of 18
49	49	this section, "credit history" means any credit-related information 19
50	50	derived from or found in a credit report or credit scoring program or 20
51	51	provided in an application for personal risk insurance, and "financial 21
52	52	history measurement program" means a program that uses an 22
53	53	applicant's credit history to measure such applicant's risk of loss. 23
54	54	(A) An insurer shall file with the commissioner any financial history 24
55	55	measurement program it uses to underwrite or rate risks for personal 25
56	56	risk insurance. Such filing shall (i) include a description of the program, 26
57	57	(ii) identify the characteristics used in such program from which a 27
58	58	measurement is derived, (iii) include the rules and procedures of such 28
59	59	program, and (iv) include an explanation of the impact of credit 29
60	60	information and items of public record on insurance rates over time. 30
61	61	Such program shall not unfairly discriminate among applicants or 31
62	62	produce rates that are excessive for the risk assumed. Any filing made 32
63	63	pursuant to this subparagraph shall be considered a trade secret for the 33
64	64	purposes of section 1-210. 34
65	65	(B) (i) An insurer that uses a financial history measurement program 35
66	66	shall submit to the commissioner documentation that demonstrates the 36
67	67	correlation between such program and the expected risk of loss, and 37
68	68	how such program impacts consumers (I) in urban territories, versus 38
69	69	consumers in nonurban territories, and (II) based on consumers' ages. 39
70	70	The commissioner may request the insurer to provide a financial history 40
71	71	measurement for a set of test examples that reflect various 41
72	72	characteristics. 42
73	73	(ii) An insurer that uses a financial history measurement program 43
74	74	shall disclose to each applicant for personal risk insurance, in writing, 44 Raised Bill No. 5372
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78	78	LCO No. 1976 3 of 6
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80	80	by telephone, by electronic mail or orally, at the time of application that 45
81	81	the applicant's credit history may be used in the underwriting or rating 46
82	82	of such applicant's policy, and that the applicant has the right to request, 47
83	83	in writing, that the insurer consider, during its underwriting or rating 48
84	84	process or during a review requested by such applicant of a rate quote, 49
85	85	an extraordinary life circumstance, as set forth in subparagraph (D) of 50
86	86	this subdivision, if such applicant's credit history has been adversely 51
87	87	impacted by such extraordinary life circumstance and such 52
88	88	extraordinary life circumstance occurred within three years before the 53
89	89	date of the application. In addition, such insurer shall provide to each 54
90	90	purchaser of such policy, not later than the date of issuance of such 55
91	91	policy, a written disclosure that includes: (I) The name, address, 56
92	92	telephone number and toll-free telephone number, if applicable, of the 57
93	93	insurer; (II) detailed information about how the insurer uses credit 58
94	94	information to underwrite or rate such policies; and (III) a summary of 59
95	95	consumer protections regarding the use of credit, in a form determined 60
96	96	by the commissioner. Such written disclosure shall be printed in 61
97	97	reasonably conspicuous type and be provided by the insurer 62
98	98	electronically, by mail or by hand delivery. 63
99	99	(C) (i) An insurer may use a financial history measurement program 64
100	100	to underwrite or rate risks only (I) for new personal risk insurance 65
101	101	policies, or (II) upon renewal, either at the request of an insured or if 66
102	102	such use reduces the premium for the insured in accordance with the 67
103	103	insurer's filed rates and rules. 68
104	104	(ii) An insurer shall not use the following characteristics in a financial 69
105	105	history measurement program: (I) The number of credit inquiries in an 70
106	106	applicant's or insured's credit report or credit history; (II) the applicant's 71
107	107	or insured's use of a particular type of credit card, debit card or charge 72
108	108	card; (III) the applicant's or insured's total available line of credit; (IV) 73
109	109	any disputed credit information while such dispute is under review by 74
110	110	a credit reporting company, provided such information is identified in 75
111	111	an applicant's or insured's credit report or credit history as being in 76
112	112	dispute; (V) collection accounts identified with a medical industry code 77
113	113	in the applicant's or insured's credit report or credit history; and (VI) the 78 Raised Bill No. 5372
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117	117	LCO No. 1976 4 of 6
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119	119	applicant's or insured's lack of credit history, unless the insurer treats 79
120	120	the applicant or insured as if such applicant or insured had neutral 80
121	121	credit information, as defined by the insurer. 81
122	122	(iii) A financial history measurement program shall give the same 82
123	123	weight to an applicant's or insured's purchase or financing of a specific 83
124	124	item regardless of the type of item purchased or financed. 84
125	125	(D) (i) Upon written request by an applicant, an insurer shall 85
126	126	consider, during its underwriting or rating process or during a review 86
127	127	requested by such applicant of a rate quote, an extraordinary life 87
128	128	circumstance of such applicant if such extraordinary life circumstance 88
129	129	occurred within three years before the date of application. If such 89
130	130	insurer determines that such applicant's credit history has been 90
131	131	adversely impacted by such extraordinary life circumstance, such 91
132	132	insurer shall grant a reasonable exception to such insurer's rates, rating 92
133	133	classifications or underwriting rules for such applicant. As used in this 93
134	134	subparagraph, "extraordinary life circumstance" means (I) a 94
135	135	catastrophic illness or injury, (II) divorce, (III) the death of a spouse, 95
136	136	child or parent, (IV) the involuntary loss of employment for more than 96
137	137	three consecutive months, (V) identity theft, (VI) total or other loss that 97
138	138	makes a home uninhabitable, (VII) other circumstances as may be 98
139	139	adopted in regulations by the commissioner, in accordance with chapter 99
140	140	54, or (VIII) any other circumstance an insurer may choose to recognize. 100
141	141	(ii) An insurer may require the applicant to provide reasonable, 101
142	142	independently verifiable written documentation of the extraordinary 102
143	143	life circumstance and the effect of such extraordinary life circumstance 103
144	144	on such applicant's credit report or credit history. Any such 104
145	145	documentation shall be kept confidential by the insurer. 105
146	146	(iii) If the insurer grants an exception pursuant to subparagraph (D)(i) 106
147	147	of this subdivision, the insurer shall (I) consider only credit information 107
148	148	that is not affected by the extraordinary life circumstance, or (II) treat 108
149	149	the applicant as if such applicant had neutral or better than neutral 109
150	150	credit information, as defined by the insurer. 110 Raised Bill No. 5372
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154	154	LCO No. 1976 5 of 6
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156	156	(iv) An insurer shall not be deemed to be out of compliance with any 111
157	157	provision of the general statutes or regulations adopted thereunder 112
158	158	concerning underwriting, rating or rate filing solely on the basis of the 113
159	159	granting of an exception pursuant to this subparagraph. 114
160	160	(E) (i) If an insurer takes an adverse action that is due at least in part 115
161	161	to the information contained in an applicant's or insured's credit report, 116
162	162	such insurer shall disclose to such applicant or insured: (I) That such 117
163	163	adverse action was based on the credit report of such insured or 118
164	164	applicant; (II) that such applicant or insured is entitled to a free copy of 119
165	165	such credit report and where such report can be obtained; (III) the types 120
166	166	of extraordinary life circumstances set forth in subparagraph (D) of this 121
167	167	subdivision; and (IV) the procedures for an applicant to inform the 122
168	168	insurer of an extraordinary life circumstance and to submit any required 123
169	169	documentation pursuant to subparagraph (D) of this subdivision. 124
170	170	(ii) For the purposes of this subdivision, an "adverse action" means (I) 125
171	171	the denial of coverage to an applicant or insured or the offering of 126
172	172	restricted coverage, (II) the offering of a higher rate, (III) the assignment 127
173	173	of an applicant or insured to a higher rate tier or to a higher-priced 128
174	174	company within an insurer group, or (IV) any other action that 129
175	175	adversely impacts an applicant or insured due to the financial history 130
176	176	measurement program. 131
177	177	(F) After an insurer's financial history measurement program has 132
178	178	been in effect for two years, the commissioner may require such insurer 133
179	179	to submit a report to the commissioner on the use of such program in 134
180	180	the state. Such report shall include information that demonstrates that 135
181	181	such program results in rates that are supported by the data and that are 136
182	182	not unfairly discriminatory, and an analysis of consumer complaints 137
183	183	submitted in writing or by electronic mail to the insurer resulting from 138
184	184	such insurer's use of a financial history measurement program, such that 139
185	185	is sufficient to identify the basis for the complaints and any subsequent 140
186	186	insurer action. 141 Raised Bill No. 5372
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190	190	LCO No. 1976 6 of 6
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192	192	This act shall take effect as follows and shall amend the following
193	193	sections:
194	194
195	195	Section 1 October 1, 2020 38a-686(b)(4) to (6)
196	196
197	197	Statement of Purpose:
198	198	To prohibit insurance companies from using an applicant's or insured's
199	199	credit history as a factor in underwriting or rating private passenger
200	200	nonfleet automobile insurance policies.
201	201	[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
202	202	that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
203	203	underlined.]
204	204