Enrolled SB 127: Relating to actions by insurers based on credit history or insurance score; and providing for an exception to consideration by an insurer of credit history or insurance score.
00Enrolled SB 127 01 Relating to actions by insurers based on credit history or insurance score; and providing for an 02 exception to consideration by an insurer of credit history or insurance score. 03 _______________ 04 * Section 1. AS 21.36.460(d) is amended to read: 05 (d) An insurer may not 06 (1) fail to renew [OR, AT RENEWAL, AGAIN UNDERWRITE OR 07 RATE] a personal insurance policy based in whole or in part on a consumer's credit 08 history or insurance score [; THE PROHIBITION IN THIS PARAGRAPH AGAINST 09 UNDERWRITING OR RATING A PERSONAL INSURANCE POLICY AT 10 RENEWAL MAY BE WAIVED BY THE CONSUMER; WAIVER ALLOWED 11 UNDER THIS PARAGRAPH MUST OCCUR AT EACH RENEWAL]; 12 (2) cancel, deny, underwrite, or rate personal insurance coverage based 13 in whole or in part on
01 (A) the absence of credit history or the inability to determine the 02 consumer's credit history if the insurer has received accurate and complete 03 information from the consumer; this subparagraph does not apply if the insurer 04 treats the consumer as if the consumer had neutral credit information as 05 approved by the director; 06 (B) credit inquiries not initiated by the consumer; 07 (C) credit inquiries relating to insurance coverage if identified 08 on a consumer's credit report; 09 (D) credit inquiries by the consumer for the consumer's own 10 credit information; 11 (E) multiple lender inquiries if coded on the consumer's credit 12 report as being for automobile, boat, recreation vehicle, or home mortgage 13 loans, unless all inquiries under that code within a 30-day period are counted 14 as one; 15 (F) credit history or an insurance score based on collection 16 accounts identified with a medical industry code; 17 (G) the consumer's use of a particular type of credit card, charge 18 card, or debit card or the absence of a credit card; 19 (H) the consumer's total available line of credit; however, the 20 consumer's ratio of debt to total available line of credit may be considered; 21 (I) the age of the most recent automobile or home loan obtained 22 by the consumer; however, an insurer may consider the bill payment history or 23 total number of loans; or 24 (J) the person's age when credit is established; 25 (3) use the credit history of the consumer when the consumer is 26 adversely affected by a joint account owner who was the spouse of the consumer or a 27 joint account owner who is the spouse of the consumer and who is a party to a divorce 28 or dissolution action against the consumer; this paragraph applies only if the consumer 29 provides written notice to the insurer that identifies the credit information that is 30 adversely affected by the joint account owner; this paragraph does not prevent the use 31 of credit history that is not identified by the consumer as required by this paragraph;
01 (4) use an insurance score that is calculated using the income, age, sex, 02 address, zip code, census block, ethnic group, religion, marital status, or nationality of 03 the consumer as a factor; 04 (5) use credit history to determine an insurance score if the history is 05 obtained more than 90 days before the policy is issued; 06 (6) use an insurance score derived from an insurance scoring model to 07 determine eligibility for an insurance payment plan; this paragraph does not prohibit 08 the use of credit history to evaluate the ability of the consumer to make payments. 09 * Sec. 2. AS 21.36.460(i)(1) is amended to read: 10 (1) "adverse action" has the meaning given in 15 U.S.C. 1681 et seq. 11 (Fair Credit Reporting Act) and includes 12 (A) cancellation, denial, or failure to renew personal insurance 13 coverage; 14 (B) charging a higher insurance premium for personal 15 insurance than would have been offered if [THE] credit history or insurance 16 score had not been considered [MORE FAVORABLE, WHETHER THE 17 CHARGE IS BY 18 (i) APPLICATION OF A RATING RULE; 19 (ii) ASSIGNMENT TO A RATING TIER THAT 20 DOES NOT HAVE THE LOWEST AVAILABLE RATES; OR 21 (iii) PLACEMENT WITH AN AFFILIATE 22 COMPANY THAT DOES NOT OFFER THE LOWEST RATES 23 AVAILABLE TO THE CONSUMER WITHIN THE AFFILIATE 24 GROUP OF INSURANCE COMPANIES]; or 25 (C) a [ANY] reduction or adverse or unfavorable change in the 26 terms of coverage or amount of personal insurance due to a consumer's credit 27 history or insurance score [; A REDUCTION OR ADVERSE OR 28 UNFAVORABLE CHANGE IN THE TERMS OF COVERAGE OCCURS 29 WHEN 30 (i) COVERAGE PROVIDED TO THE CONSUMER 31 IS NOT AS BROAD IN SCOPE AS COVERAGE REQUESTED BY
01 THE CONSUMER BUT AVAILABLE TO OTHER INSUREDS OF 02 THE INSURER OR ANY AFFILIATE; OR 03 (ii) THE CONSUMER IS NOT ELIGIBLE FOR 04 BENEFITS THAT ARE AVAILABLE THROUGH AFFILIATE 05 INSURERS]; 06 * Sec. 3. AS 21.36 is amended by adding a new section to read: 07 Sec. 21.36.461. Extraordinary life circumstances. (a) Except as provided in 08 AS 21.36.460(d), an insurer that uses a consumer's credit history or insurance score 09 shall provide reasonable exceptions to the insurer's rates, rating classifications, 10 company or tier placement, or underwriting rules or guidelines for a consumer who 11 has experienced and whose credit history or insurance score has been affected by one 12 or more of the following extraordinary life circumstances: 13 (1) a catastrophe, as declared by the director; 14 (2) a serious illness or injury, or a serious illness of or injury to an 15 immediate family member; 16 (3) the death of a spouse, child, or parent; 17 (4) divorce or the involuntary interruption of spousal support or 18 maintenance payments; 19 (5) identity theft; 20 (6) loss of employment for three months or more as a result of 21 involuntary termination; 22 (7) military overseas deployment; or 23 (8) other events, as determined by the insurer. 24 (b) If a consumer submits a request for an exception under (a) of this section, 25 an insurer may, in its sole discretion, 26 (1) require the consumer to provide reasonable written and 27 independently verifiable documentation of the extraordinary life circumstance; 28 (2) require the consumer to demonstrate that the circumstances had a 29 direct and meaningful effect on the consumer's credit information; 30 (3) require that a request be made not more than 60 days after the date 31 of the application for insurance or the policy renewal.
01 (c) If a consumer submits a request for an exception under (a) of this section, 02 an insurer may, in its sole discretion, 03 (1) grant an exception; 04 (2) grant an exception if the consumer asks for consideration of 05 repeated events; and 06 (3) grant an exception if the insurer previously had considered a 07 request. 08 (d) An insurer may not be considered out of compliance with a law or rule 09 relating to underwriting, rating, or rate filing as a result of granting an exception under 10 this section. 11 (e) Nothing in this section may be construed to provide a consumer with a 12 cause of action that does not exist in the absence of this section. 13 (f) The insurer shall notify consumers that reasonable exceptions are available 14 and provide information about how a consumer may apply for an exception under (a) 15 of this section. 16 (g) Within 30 days after the insurer's receipt of sufficient documentation of an 17 event described in (a) of this section, the insurer shall inform the consumer, in writing, 18 of the outcome of the consumer's request. 19 (h) In this section, "consumer" has the meaning given in AS 21.36.460.