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       Florida Senate - 2010                                     SB 662
       By Senator Storms
       10-00145-10                                            2010662__
    1                        A bill to be entitled                      
    2         An act relating to insurance; amending s. 626.9541,
    3         F.S.; prohibiting an insurer that issues motor vehicle
    4         insurance from using a rate, rating schedule, rating
    5         manual, or an underwriting rule that is not contained
    6         in a rating manual and is determined in whole or in
    7         part on the basis of certain characteristics of an
    8         insured; including the refusal to insure or continue
    9         to insure any individual or risk because of
   10         educational level, trade, business, occupation,
   11         profession, credit report, credit score, or certain
   12         forms of lawful employment among the list of
   13         activities constituting unfair methods of competition
   14         and unfair or deceptive acts; amending s. 626.9741,
   15         F.S.; prohibiting the use by insurers of credit
   16         reports and credit scores in making rating
   17         determinations; deleting provisions limiting and
   18         regulating the use of credit score by insurers when
   19         making rating determinations; deleting the definition
   20         of “adverse decision” and “tier”; deleting provisions
   21         authorizing the Financial Services Commission to adopt
   22         rules; providing an effective date.
   24  Be It Enacted by the Legislature of the State of Florida:
   26         Section 1. Paragraphs (o) and (x) of subsection (1) of
   27  section 626.9541, Florida Statutes, are amended to read:
   28         626.9541 Unfair methods of competition and unfair or
   29  deceptive acts or practices defined.—
   31  ACTS.—The following are defined as unfair methods of competition
   32  and unfair or deceptive acts or practices:
   33         (o) Illegal dealings in premiums; excess or reduced charges
   34  for insurance.—
   35         1. Knowingly collecting any sum as a premium or charge for
   36  insurance, which is not then provided, or is not in due course
   37  to be provided, subject to acceptance of the risk by the
   38  insurer, by an insurance policy issued by an insurer as
   39  permitted by this code.
   40         2. Knowingly collecting as a premium or charge for
   41  insurance any sum in excess of or less than the premium or
   42  charge applicable to such insurance, in accordance with the
   43  applicable classifications and rates as filed with and approved
   44  by the office, and as specified in the policy; or, in cases when
   45  classifications, premiums, or rates are not required by this
   46  code to be so filed and approved, premiums and charges collected
   47  from a Florida resident in excess of or less than those
   48  specified in the policy and as fixed by the insurer. This
   49  provision does shall not be deemed to prohibit the charging and
   50  collection, by surplus lines agents licensed under part VIII of
   51  this chapter, of the amount of applicable state and federal
   52  taxes, or fees as authorized by s. 626.916(4), in addition to
   53  the premium required by the insurer or the charging and
   54  collection, by licensed agents, of the exact amount of any
   55  discount or other such fee charged by a credit card facility in
   56  connection with the use of a credit card, as authorized by
   57  subparagraph (q)3., in addition to the premium required by the
   58  insurer. This subparagraph does shall not be construed to
   59  prohibit collection of a premium for a universal life or a
   60  variable or indeterminate value insurance policy made in
   61  accordance with the terms of the contract.
   62         3.a. Imposing or requesting an additional premium for a
   63  policy of motor vehicle liability, personal injury protection,
   64  medical payment, or collision insurance or any combination
   65  thereof or refusing to renew the policy solely because the
   66  insured was involved in a motor vehicle accident unless the
   67  insurer’s file contains information from which the insurer in
   68  good faith determines that the insured was substantially at
   69  fault in the accident.
   70         b. An insurer that which imposes and collects such a
   71  surcharge or which refuses to renew such policy shall, in
   72  conjunction with the notice of premium due or notice of
   73  nonrenewal, notify the named insured that he or she is entitled
   74  to reimbursement of such amount or renewal of the policy under
   75  the conditions listed below and will subsequently reimburse him
   76  or her or renew the policy, if the named insured demonstrates
   77  that the operator involved in the accident was:
   78         (I) Lawfully parked;
   79         (II) Reimbursed by, or on behalf of, a person responsible
   80  for the accident or has a judgment against such person;
   81         (III) Struck in the rear by another vehicle headed in the
   82  same direction and was not convicted of a moving traffic
   83  violation in connection with the accident;
   84         (IV) Hit by a “hit-and-run” driver, if the accident was
   85  reported to the proper authorities within 24 hours after
   86  discovering the accident;
   87         (V) Not convicted of a moving traffic violation in
   88  connection with the accident, but the operator of the other
   89  automobile involved in such accident was convicted of a moving
   90  traffic violation;
   91         (VI) Finally adjudicated not to be liable by a court of
   92  competent jurisdiction;
   93         (VII) In receipt of a traffic citation which was dismissed
   94  or nolle prossed; or
   95         (VIII) Not at fault as evidenced by a written statement
   96  from the insured establishing facts demonstrating lack of fault
   97  which are not rebutted by information in the insurer’s file from
   98  which the insurer in good faith determines that the insured was
   99  substantially at fault.
  100         c. In addition to the other provisions of this
  101  subparagraph, an insurer may not fail to renew a policy if the
  102  insured has had only one accident in which he or she was at
  103  fault within the current 3-year period. However, an insurer may
  104  nonrenew a policy for reasons other than accidents in accordance
  105  with s. 627.728. This subparagraph does not prohibit nonrenewal
  106  of a policy under which the insured has had three or more
  107  accidents, regardless of fault, during the most recent 3-year
  108  period.
  109         4. Imposing or requesting an additional premium for, or
  110  refusing to renew, a policy for motor vehicle insurance solely
  111  because the insured committed a noncriminal traffic infraction
  112  as described in s. 318.14 unless the infraction is:
  113         a. A second infraction committed within an 18-month period,
  114  or a third or subsequent infraction committed within a 36-month
  115  period.
  116         b. A violation of s. 316.183, when such violation is a
  117  result of exceeding the lawful speed limit by more than 15 miles
  118  per hour.
  119         5. Upon the request of the insured, the insurer and
  120  licensed agent shall supply to the insured the complete proof of
  121  fault or other criteria that which justifies the additional
  122  charge or cancellation.
  123         6. An No insurer may not shall impose or request an
  124  additional premium for motor vehicle insurance, cancel or refuse
  125  to issue a policy, or refuse to renew a policy because the
  126  insured or the applicant is a handicapped or physically disabled
  127  person, so long as such handicap or physical disability does not
  128  substantially impair such person’s mechanically assisted driving
  129  ability.
  130         7. An No insurer may not cancel or otherwise terminate any
  131  insurance contract or coverage, or require execution of a
  132  consent to rate endorsement, during the stated policy term for
  133  the purpose of offering to issue, or issuing, a similar or
  134  identical contract or coverage to the same insured with the same
  135  exposure at a higher premium rate or continuing an existing
  136  contract or coverage with the same exposure at an increased
  137  premium.
  138         8. An No insurer may not issue a nonrenewal notice on any
  139  insurance contract or coverage, or require execution of a
  140  consent to rate endorsement, for the purpose of offering to
  141  issue, or issuing, a similar or identical contract or coverage
  142  to the same insured at a higher premium rate or continuing an
  143  existing contract or coverage at an increased premium without
  144  meeting any applicable notice requirements.
  145         9. An No insurer may not shall, with respect to premiums
  146  charged for motor vehicle insurance, unfairly discriminate
  147  solely on the basis of age, sex, marital status, or scholastic
  148  achievement.
  149         10.An insurer may not, with respect to premiums charged
  150  for motor vehicle insurance, use any rate, rating schedule,
  151  rating manual, or underwriting rule that is not contained in a
  152  rating manual and that is determined in whole or in part on the
  153  basis of any of the following as they relate to an insured:
  154         a.Educational level.
  155         b.Trade, business, occupation, profession, or any lawful
  156  form of employment that does not directly involve the use of one
  157  or more vehicles specifically insured or identified in the
  158  insurance policy.
  159         c.Credit report or credit score as defined in s. 626.9741.
  160         11.10. Imposing or requesting an additional premium for
  161  motor vehicle comprehensive or uninsured motorist coverage
  162  solely because the insured was involved in a motor vehicle
  163  accident or was convicted of a moving traffic violation.
  164         12.11.An No insurer may not shall cancel or issue a
  165  nonrenewal notice on any insurance policy or contract without
  166  complying with any applicable cancellation or nonrenewal
  167  provision required under the Florida Insurance Code.
  168         13.12.An No insurer may not shall impose or request an
  169  additional premium, cancel a policy, or issue a nonrenewal
  170  notice on any insurance policy or contract because of any
  171  traffic infraction when adjudication has been withheld and no
  172  points have been assessed pursuant to s. 318.14(9) and (10).
  173  However, this subparagraph does not apply to traffic infractions
  174  involving accidents in which the insurer has incurred a loss due
  175  to the fault of the insured.
  176         (x) Refusal to insure.—In addition to other provisions of
  177  this code, the refusal to insure, or continue to insure, any
  178  individual or risk because of the individual’s educational
  179  level, trade, business, occupation, profession, any form of
  180  lawful employment, or credit report or credit score as defined
  181  in s. 626.9741, or solely because of:
  182         1. Race, color, creed, marital status, gender sex, or
  183  national origin;
  184         2. The residence or, age, or lawful occupation of the
  185  individual or the location of the risk, unless there is a
  186  reasonable relationship between the residence or, age, or lawful
  187  occupation of the individual or the location of the risk and the
  188  coverage issued or to be issued;
  189         3. The insured’s or applicant’s failure to agree to place
  190  collateral business with any insurer, unless the coverage
  191  applied for would provide liability coverage which is excess
  192  over that provided in policies maintained on property or motor
  193  vehicles;
  194         4. The insured’s or applicant’s failure to purchase
  195  noninsurance services or commodities, including automobile
  196  services as defined in s. 624.124;
  197         5. The fact that the insured or applicant is a public
  198  official; or
  199         6. The fact that the insured or applicant had been
  200  previously refused insurance coverage by any insurer, when such
  201  refusal to insure or continue to insure for this reason occurs
  202  with such frequency as to indicate a general business practice.
  203         Section 2. Section 626.9741, Florida Statutes, is amended
  204  to read:
  205         626.9741 Use of credit reports and credit scores by
  206  insurers.—An insurer may not use credit reports or credit scores
  207  in making rating determinations. For purposes of this section,
  208  the term:
  209         (1)The purpose of this section is to regulate and limit
  210  the use of credit reports and credit scores by insurers for
  211  underwriting and rating purposes. This section applies only to
  212  personal lines motor vehicle insurance and personal lines
  213  residential insurance, which includes homeowners, mobile home
  214  owners’ dwelling, tenants, condominium unit owners, cooperative
  215  unit owners, and similar types of insurance.
  216         (2)As used in this section, the term:
  217         (a)“Adverse decision” means a decision to refuse to issue
  218  or renew a policy of insurance; to issue a policy with
  219  exclusions or restrictions; to increase the rates or premium
  220  charged for a policy of insurance; to place an insured or
  221  applicant in a rating tier that does not have the lowest
  222  available rates for which that insured or applicant is otherwise
  223  eligible; or to place an applicant or insured with a company
  224  operating under common management, control, or ownership which
  225  does not offer the lowest rates available, within the affiliate
  226  group of insurance companies, for which that insured or
  227  applicant is otherwise eligible.
  228         (1)(b) “Credit report” means any written, oral, or other
  229  communication of any information by a consumer reporting agency,
  230  as defined in the federal Fair Credit Reporting Act, 15 U.S.C.
  231  ss. 1681 et seq., bearing on a consumer’s credit worthiness,
  232  credit standing, or credit capacity, which is used or expected
  233  to be used or collected as a factor to establish a person’s
  234  eligibility for credit or insurance, or any other purpose
  235  authorized pursuant to the applicable provision of such federal
  236  act. A credit score alone, as calculated by a credit reporting
  237  agency or by or for the insurer, may not be considered a credit
  238  report.
  239         (2)(c) “Credit score” means a score, grade, or value that
  240  is derived by using any or all data from a credit report in any
  241  type of model, method, or program, whether electronically, in an
  242  algorithm, computer software or program, or any other process,
  243  for the purpose of grading or ranking credit report data.
  244         (d)“Tier” means a category within a single insurer into
  245  which insureds with substantially similar risk, exposure, or
  246  expense factors are placed for purposes of determining rate or
  247  premium.
  248         (3)An insurer must inform an applicant or insured, in the
  249  same medium as the application is taken, that a credit report or
  250  score is being requested for underwriting or rating purposes. An
  251  insurer that makes an adverse decision based, in whole or in
  252  part, upon a credit report must provide at no charge, a copy of
  253  the credit report to the applicant or insured or provide the
  254  applicant or insured with the name, address, and telephone
  255  number of the consumer reporting agency from which the insured
  256  or applicant may obtain the credit report. The insurer must
  257  provide notification to the consumer explaining the reasons for
  258  the adverse decision. The reasons must be provided in
  259  sufficiently clear and specific language so that a person can
  260  identify the basis for the insurer’s adverse decision. Such
  261  notification shall include a description of the four primary
  262  reasons, or such fewer number as existed, which were the primary
  263  influences of the adverse decision. The use of generalized terms
  264  such as “poor credit history,” “poor credit rating,” or “poor
  265  insurance score” does not meet the explanation requirements of
  266  this subsection. A credit score may not be used in underwriting
  267  or rating insurance unless the scoring process produces
  268  information in sufficient detail to permit compliance with the
  269  requirements of this subsection. It shall not be deemed an
  270  adverse decision if, due to the insured’s credit report or
  271  credit score, the insured continues to receive a less favorable
  272  rate or placement in a less favorable tier or company at the
  273  time of renewal except for renewals or reunderwriting required
  274  by this section.
  275         (4)(a)An insurer may not request a credit report or score
  276  based upon the race, color, religion, marital status, age,
  277  gender, income, national origin, or place of residence of the
  278  applicant or insured.
  279         (b)An insurer may not make an adverse decision solely
  280  because of information contained in a credit report or score
  281  without consideration of any other underwriting or rating
  282  factor.
  283         (c)An insurer may not make an adverse decision or use a
  284  credit score that could lead to such a decision if based, in
  285  whole or in part, on:
  286         1.The absence of, or an insufficient, credit history, in
  287  which instance the insurer shall:
  288         a.Treat the consumer as otherwise approved by the Office
  289  of Insurance Regulation if the insurer presents information that
  290  such an absence or inability is related to the risk for the
  291  insurer;
  292         b.Treat the consumer as if the applicant or insured had
  293  neutral credit information, as defined by the insurer;
  294         c.Exclude the use of credit information as a factor and
  295  use only other underwriting criteria;
  296         2.Collection accounts with a medical industry code, if so
  297  identified on the consumer’s credit report;
  298         3.Place of residence; or
  299         4.Any other circumstance that the Financial Services
  300  Commission determines, by rule, lacks sufficient statistical
  301  correlation and actuarial justification as a predictor of
  302  insurance risk.
  303         (d)An insurer may use the number of credit inquiries
  304  requested or made regarding the applicant or insured except for:
  305         1.Credit inquiries not initiated by the consumer or
  306  inquiries requested by the consumer for his or her own credit
  307  information.
  308         2.Inquiries relating to insurance coverage, if so
  309  identified on a consumer’s credit report.
  310         3.Collection accounts with a medical industry code, if so
  311  identified on the consumer’s credit report.
  312         4.Multiple lender inquiries, if coded by the consumer
  313  reporting agency on the consumer’s credit report as being from
  314  the home mortgage industry and made within 30 days of one
  315  another, unless only one inquiry is considered.
  316         5.Multiple lender inquiries, if coded by the consumer
  317  reporting agency on the consumer’s credit report as being from
  318  the automobile lending industry and made within 30 days of one
  319  another, unless only one inquiry is considered.
  320         (e)An insurer must, upon the request of an applicant or
  321  insured, provide a means of appeal for an applicant or insured
  322  whose credit report or credit score is unduly influenced by a
  323  dissolution of marriage, the death of a spouse, or temporary
  324  loss of employment. The insurer must complete its review within
  325  10 business days after the request by the applicant or insured
  326  and receipt of reasonable documentation requested by the
  327  insurer, and, if the insurer determines that the credit report
  328  or credit score was unduly influenced by any of such factors,
  329  the insurer shall treat the applicant or insured as if the
  330  applicant or insured had neutral credit information or shall
  331  exclude the credit information, as defined by the insurer,
  332  whichever is more favorable to the applicant or insured. An
  333  insurer shall not be considered out of compliance with its
  334  underwriting rules or rates or forms filed with the Office of
  335  Insurance Regulation or out of compliance with any other state
  336  law or rule as a result of granting any exceptions pursuant to
  337  this subsection.
  338         (5)A rate filing that uses credit reports or credit scores
  339  must comply with the requirements of s. 627.062 or s. 627.0651
  340  to ensure that rates are not excessive, inadequate, or unfairly
  341  discriminatory.
  342         (6)An insurer that requests or uses credit reports and
  343  credit scoring in its underwriting and rating methods shall
  344  maintain and adhere to established written procedures that
  345  reflect the restrictions set forth in the federal Fair Credit
  346  Reporting Act, this section, and all rules related thereto.
  347         (7)(a)An insurer shall establish procedures to review the
  348  credit history of an insured who was adversely affected by the
  349  use of the insured’s credit history at the initial rating of the
  350  policy, or at a subsequent renewal thereof. This review must be
  351  performed at a minimum of once every 2 years or at the request
  352  of the insured, whichever is sooner, and the insurer shall
  353  adjust the premium of the insured to reflect any improvement in
  354  the credit history. The procedures must provide that, with
  355  respect to existing policyholders, the review of a credit report
  356  will not be used by the insurer to cancel, refuse to renew, or
  357  require a change in the method of payment or payment plan.
  358         (b)However, as an alternative to the requirements of
  359  paragraph (a), an insurer that used a credit report or credit
  360  score for an insured upon inception of a policy, who will not
  361  use a credit report or score for reunderwriting, shall
  362  reevaluate the insured within the first 3 years after inception,
  363  based on other allowable underwriting or rating factors,
  364  excluding credit information if the insurer does not increase
  365  the rates or premium charged to the insured based on the
  366  exclusion of credit reports or credit scores.
  367         (8)The commission may adopt rules to administer this
  368  section. The rules may include, but need not be limited to:
  369         (a)Information that must be included in filings to
  370  demonstrate compliance with subsection (3).
  371         (b)Statistical detail that insurers using credit reports
  372  or scores under subsection (5) must retain and report annually
  373  to the Office of Insurance Regulation.
  374         (c)Standards that ensure that rates or premiums associated
  375  with the use of a credit report or score are not unfairly
  376  discriminatory, based upon race, color, religion, marital
  377  status, age, gender, income, national origin, or place of
  378  residence.
  379         (d)Standards for review of models, methods, programs, or
  380  any other process by which to grade or rank credit report data
  381  and which may produce credit scores in order to ensure that the
  382  insurer demonstrates that such grading, ranking, or scoring is
  383  valid in predicting insurance risk of an applicant or insured.
  384         Section 3. This act shall take effect July 1, 2010.

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