HB 1474 -- Use of Credit Scores by Insurance Companies

Sponsor:  Hughes

This bill changes the laws regarding the use of credit
information when underwriting insurance contracts.  In its main
provisions, the bill:

(1)  Revises the definition of "adverse action" to have the same
meaning as in the federal Fair Credit Reporting Act including the
cancellation, denial, or nonrenewal of personal insurance
coverage and creating an unfavorable change in the terms of
coverage, including charging higher premiums;

(2)  Revises the definition of "contract" as it relates to
automobile and property insurance policies to include motorcycle,
manufactured homes, and personal inland marine coverage;
mechanical breakdown coverage for autos and home appliances;
noncommercial dwelling fire insurance; and boat, personal
watercraft, snow mobile, and recreational vehicle policies;

(3)  Prohibits insurers from using an insurance credit score
derived from using a person's income, gender, address, ethnic
group, religion, marital status, education level, or nationality.
No insurer may use loss information in calculating its insurance
credit score if it also uses loss information separately to
calculate its rates.  The absence of credit information or an
inability to calculate a score cannot be considered when
underwriting insurance;

(4)  Prohibits insurers from using credit information to
underwrite a policy after it has been in force for more than 36
months, unless there is a substantial change in the risk based on
other factors excluding credit information;

(5)  Allows the consumer, at his or her annual renewal, to
request the insurer re-underwrite the policy based on a current
credit report or insurance score;

(6)  Prohibits insurers and credit reporting agencies from using
as a negative factor in underwriting:

(a)  Credit inquiries not initiated by the insured;

(b)  Medical collection accounts and inquiries relating to
insurance coverage;

(c)  Multiple lender inquiries;

(d)  Absence of credit history or the inability to determine the
history;

(e)  Use of a particular credit, charge, or debit cards; or

(f)  Consumer's total available line of credit; and

(7)  Requires insurers to file their insurance credit scoring
models or other scoring processes with the Department of
Insurance, Financial Institutions and Professional Registration.

Missouri House of Representatives
95th General Assembly, 2nd Regular Session
Last Updated September 14, 2010 at 3:11 pm