February 3, 2015, Introduced by Reps. Gay-Dagnogo, Sarah Roberts, Banks, Byrd, Yanez, Singh, Hovey-Wright, Robinson, Wittenberg, Derek Miller, Lane, Love, Garrett, Talabi, Smiley, Rutledge, Neeley, Phelps, Durhal, Faris and Cochran and referred to the Committee on Insurance.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending sections 2151 and 2153 (MCL 500.2151 and 500.2153),
section 2151 as added by 2012 PA 165 and section 2153 as added by
2012 PA 206; and to repeal acts and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2151. As used in this chapter:
(a)
"Adverse action" means an increase in any charge for, or a
reduction
or other adverse or unfavorable change in the terms of
coverage
or amount of, any personal insurance, existing or applied
for.
(a) (b)
"Consumer reporting
agency" means any a person which,
that, for monetary fees or dues or on a cooperative nonprofit
basis, regularly engages in whole or in part in the practice of
assembling or evaluating consumer credit information or other
information on consumers for the purpose of furnishing consumer
reports to third parties.
(b) (c)
"Credit information"
means any credit-related
information derived from a credit report, found on a credit report
itself, or provided on an application for personal insurance.
Information
that is not credit-related shall is not be considered
credit information, regardless of whether it is contained in a
credit report or in an application, or is used to calculate an
insurance score.
(c) (d)
"Credit report" means any
written, oral, or other
communication of information by a consumer reporting agency bearing
on a consumer's credit worthiness, credit standing, or credit
capacity that is used or expected to be used or collected in whole
or in part for the purpose of serving as a factor in the rating of
personal insurance.
(d) (e)
"Insurance score" means a
number or rating that is
derived from an algorithm, computer application, model, or other
process that is based in whole or in part on credit information for
the purposes of predicting the future insurance loss exposure of an
individual applicant or insured.
(e) (f)
"Personal insurance"
means property/casualty insurance
written for personal, family, or household use, including
automobile, home, motorcycle, mobile home, noncommercial dwelling
fire, boat, personal watercraft, snowmobile, and recreational
vehicle, whether written on an individual, group, franchise,
blanket policy, or similar basis.
Sec. 2153. An insurer shall not use credit information or an
insurance score as any part of a decision to deny, cancel, or
nonrenew a personal insurance policy under chapters 21, 24, and 26.
However,
An insurer shall not use credit information and or an
insurance
score may be used to determine premium installment
payment
options and availability. An insurer shall not apply credit
information
or a credit-based insurance score that is otherwise
permitted
under this act unless all of the following are met:
(a)
The insurer or its producer discloses, either on the
insurance
application or at the time the application is taken, that
it
may obtain credit information in connection with the
application.
This disclosure shall be either written or provided to
an
applicant in the same medium as the application for insurance.
An
insurer may use the following disclosure statement:
"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.".
(b)
The insurer or a third party on behalf of the insurer does
not
use income, gender, address, zip code, ethnic group, religion,
marital
status, or nationality of the insured or insurance
applicant
in calculating an insurance score.
(c)
The insurer does not take an adverse action against a
consumer
because he or she does not have a credit card account.
However,
an insurer may take an adverse action against that insured
if
it is based on any other applicable factor that is independent
of
the fact that the consumer does not have a credit card account.
(d)
The insurer or a third party on behalf of the insurer does
not
consider an absence of credit information or an inability to
calculate
an insurance score in the rating of personal insurance
unless
any resulting rate differential is filed with and not
disapproved
by the office of financial and insurance regulation.
The
office of financial and insurance regulation shall not
disapprove
a filing under this subdivision if it meets 1 of the
following:
(i) Is reasonably justified by differences in losses,
expenses,
or
both.
(ii) Provides the insured or insurance applicant with a
discount
that is not less, on average, than the average credit
based
discount received by the insurer's insureds in this state.
(e)
The insurer or a third party on the insurer's behalf uses
a
credit report issued within 90 days before the date an insurance
score
based on that credit report is first applied to the insured.
(f)
Upon the insured's request or with the insured's
permission
the insured's producer's request at annual renewal, or
upon
the insured's request during the course of the policy, an
insurer
or a third party on the insurer's behalf shall obtain a new
credit
report or insurance score and rerate the insured. An insurer
or
a third party on the insurer's behalf is not required to obtain
a
new credit report or recalculate the insurance score more
frequently
than once in a 12-month period. An insurer or a third
party
on the insurer's behalf may order a credit report upon any
renewal
if the insurer does so using a consistent methodology with
all
its insureds.
(g)
For insurance scores calculated or recalculated on or
after
the effective date of the amendatory act that added this
section,
the insurer or a third party on the insurer's behalf does
not
use the following as a negative factor in any insurance score
or
in reviewing credit information:
(i) Credit inquiries not initiated by the consumer or
requested
by
the consumer for his or her own credit information.
(ii) Credit inquiries relating to insurance coverage,
if so
identified
on an insured's or insurance applicant's credit report.
(iii) Multiple lender inquiries, if coded by the
consumer
reporting
agency on the credit report as being from the home
mortgage
industry and made within 30 days of one another, unless
only
1 inquiry is considered.
(iv) Multiple lender inquiries, if coded by the
consumer
reporting
agency on the credit report as being from the automobile
lending
industry and made within 30 days of one another, unless
only
1 inquiry is considered.
(v) Collection accounts with a medical industry code,
if so
identified
on the consumer's credit report.
Enacting section 1. Sections 2154 to 2161 of the insurance
code of 1956, 1956 PA 218, MCL 500.2154 to 500.2161, are repealed.