HB0181 96TH GENERAL ASSEMBLY

LRB096 03299 RPM 13317 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB0181

Introduced 1/14/2009, by Rep. Deborah L. Graham

SYNOPSIS AS INTRODUCED:

215 ILCS 157/20
215 ILCS 157/22
215 ILCS 157/25
215 ILCS 157/30

Amends the Credit Information in Personal Insurance Act. Provides that an insurer that uses credit information to underwrite risks shall not (i) take an adverse action against a consumer solely because he or she does not have a credit card account; (ii) take an adverse action against a consumer based on credit information, unless and until the insurer satisfies certain conditions, and (iii) use certain credit information as a negative factor in any insurance scoring methodology or in reviewing credit information for the purpose of underwriting or rating a policy of personal insurance. Provides that an insurer authorized to do business in this State may not take adverse action against a consumer who has tendered notice of an extraordinary life event unless and until the insurer has reviewed the consumer's notification and provided the consumer with a written explanation for its decision. Provides that if the insured has overpaid premium due to incorrect or incomplete credit information, the insurer shall refund to the insured the amount of overpayment calculated back to the shorter of either the last 12 months of coverage or the actual policy period. Provides that the insurer must provide the disclosure statement required under the provision each time the insurer obtains the consumer's credit report. Makes other changes. Effective immediately.

A BILL FOR

AN ACT concerning insurance.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Use of Credit Information in Personal Insurance Act is amended by changing Sections 20, 22, 25, and 30 as follows:

(215 ILCS 157/20)

Sec. 20. Use of credit information. An insurer authorized to do business in this State that uses credit information to underwrite or rate risks shall not:

(1) Use an insurance score that is calculated using income, gender, address, ethnic group, religion, marital status, or nationality of the consumer as a factor.

(2) Deny, cancel, or nonrenew a policy of personal insurance solely on the basis of credit information, without consideration of any other applicable underwriting factor independent of credit information and not expressly prohibited by item (1). An insurer shall not be considered to have denied, cancelled, or nonrenewed a policy if coverage is available through an affiliate.

(3) Base an insured's renewal rates for personal insurance solely upon credit information, without consideration of any other applicable factor independent of credit information. An insurer shall not be considered to have based rates solely on credit information if coverage is available in a different tier of the same insurer.

(4) Take an adverse action against a consumer solely because he or she does not have a credit card account, without consideration of any other applicable factor independent of credit information.

(5) Consider an absence of credit information or an inability to calculate an insurance score in underwriting or rating personal insurance, unless the insurer does one of the following:

(A) Treats the consumer as otherwise filed with the Department, if the insurer presents information that such an absence or inability relates to the risk for the insurer and submits a filing certification form signed by an officer for the insurer certifying that such treatment is actuarially justified.

(B) Treats the consumer as if the applicant or insured had neutral credit information, as defined by the insurer.

(C) Excludes the use of credit information as a factor and uses only other underwriting criteria.

(6) Take an adverse action against a consumer based on credit information, unless and until an insurer completes all of the following:

(i) obtains and uses a credit report issued or an insurance score calculated within 90 days from the date the policy is first written or renewal is issued; .

(ii) notifies the consumer, in writing, that the insurer has obtained the consumer's credit report;

(iii) informs the consumer, in writing, what information from the consumer's credit report would trigger a potentially adverse action; and

(iv) offers the consumer an opportunity to respond, within 30 days, to the negative or derogatory information from the credit report.

The insurer shall then consider the consumer's response prior to taking action. If the insurer decides to take negative action, the insurer must communicate that fact and its rationale for doing so in writing.

(7) Use credit information unless not later than every 36 months following the last time that the insurer obtained current credit information for the insured, the insurer recalculates the insurance score or obtains an updated credit report. Regardless of the other requirements of this Section:

(A) At annual renewal, upon the request of a consumer or the consumer's agent, the insurer shall re-underwrite and re-rate the policy based upon a current credit report or insurance score. An insurer need not recalculate the insurance score or obtain the updated credit report of a consumer more frequently than once in a 12-month period.

(B) The insurer shall have the discretion to obtain current credit information upon any renewal before the expiration of 36 months, if consistent with its underwriting guidelines.

(C) An insurer is not required to obtain current credit information for an insured, despite the requirements of subitem (A) of item (7) of this Section if one of the following applies:

(a) The insurer is treating the consumer as otherwise filed with the Department.

(b) The insured is in the most favorably-priced tier of the insurer, within a group of affiliated insurers. However, the insurer shall have the discretion to order credit information, if consistent with its underwriting guidelines.

(c) Credit was not used for underwriting or rating the insured when the policy was initially written. However, the insurer shall have the discretion to use credit for underwriting or rating the insured upon renewal, if consistent with its underwriting guidelines.

(d) The insurer re-evaluates the insured beginning no later than 36 months after inception and thereafter based upon other underwriting or rating factors, excluding credit information.

(8) Use the following as a negative factor in any insurance scoring methodology or in reviewing credit information for the purpose of underwriting or rating a policy of personal insurance:

(A) Credit inquiries not initiated by the consumer or inquiries requested by the consumer for his or her 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 the consumer's credit report.

(D) Multiple lender inquiries, if coded by the consumer reporting agency on the consumer's credit report as being from the home mortgage industry and made within 30 days of one another, unless only one inquiry is considered.

(E) Multiple lender inquiries, if coded by the consumer reporting agency on the consumer's credit report as being from the automobile lending industry and made within 30 days of one another, unless only one inquiry is considered.

(F) Any credit information that the consumer is disputing or has disputed, or any credit information for a dispute that is under review by the credit reporting agency or creditor.

(G) Information related to the financing of a primary residence if the consumer occupies the premises and is not in default on the financing agreement.

(Source: P.A. 93-114, eff. 10-1-03; 93-477, eff. 10-1-03.)

(215 ILCS 157/22)

Sec. 22. Extraordinary life events.

(a) An insurer authorized to do business in this State that uses credit information to underwrite or rate risks shall review and consider an exception to the risk score based upon extraordinary life events after receiving a written and signed notification from the applicant or insured explaining how the applicant or insured believes the extraordinary life event adversely impacts the applicant's or insured's insurance risk score. An insurer authorized to do business in this State may not take adverse action against a consumer who has tendered notice of an extraordinary life event unless and until the insurer has reviewed the consumer's notification and provided the consumer with a written explanation for its decision.

(b) For the purposes of this Section, "extraordinary life event" means the following:

(1) a catastrophic illness or injury to an applicant or insured or an immediate family member of an applicant or insured;

(2) the death of a spouse, child, or parent of an applicant or insured;

(3) involuntary loss of employment for a period of 3 months or more by an applicant or insured;

(4) identity theft of an applicant or insured; or

(5) dissolution of marriage of an applicant or insured.

(Source: P.A. 94-245, eff. 7-1-06.)

(215 ILCS 157/25)

Sec. 25. Dispute resolution and error correction. If it is determined through any the dispute resolution process, including, but not limited to the process set forth in the federal Fair Credit Reporting Act, 15 U.S.C. 1681i(a)(5), that the credit information of a current insured was incorrect or incomplete and if the insurer receives notice of that determination from either the consumer reporting agency or from the insured, the insurer shall re-underwrite and re-rate the consumer within 30 days after receiving the notice. After re-underwriting or re-rating the insured, the insurer shall make any adjustments necessary, consistent with its underwriting and rating guidelines. If an insurer determines that the insured has overpaid premium due to incorrect or incomplete credit information, the insurer shall refund to the insured the amount of overpayment calculated back to the shorter of either the last 12 months of coverage or the actual policy period.

(Source: P.A. 93-114, eff. 10-1-03.)

(215 ILCS 157/30)

Sec. 30. Initial notification.

(a) If an insurer writing personal insurance uses credit information in underwriting or rating a consumer, the insurer or its agent shall disclose, either on the insurance application or at the time the insurance application is taken, that it may obtain credit information in connection with the application. The disclosure shall be either written or provided to an applicant in the same medium as the application for insurance. The insurer must need not provide the disclosure statement required under this Section each time the insurer obtains the consumer's credit report to any insured on a renewal policy, if the consumer has previously been provided a disclosure statement.

(b) Use of the following example disclosure statement constitutes compliance with this Section: "In connection with this application for insurance, we may review your credit report or obtain or use a credit-based insurance score based on the information contained in that credit report. We may use a third party in connection with the development of your insurance score. Negative information obtained from your credit report may cause you to pay higher insurance premiums. Accordingly, you should be aware of the contents of your credit report so that you can review it periodically. Federal law gives you the right to dispute inaccurate or incomplete information on your credit reports.".

(Source: P.A. 93-114, eff. 10-1-03.)

Section 99. Effective date. This Act takes effect upon becoming law.