HB 1557 -- 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, and 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;

(3)  Prohibits insurers from using a credit score derived from
using a person's income, gender, address, heritage, religion,
marital status, or education.  The absence of credit information
or an inability to calculate a score cannot be used when
underwriting insurance;

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

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

(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 credit inquiries;

(d)  Absence of credit history;

(e)  Use of certain credit cards; or

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

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

Missouri House of Representatives
94th General Assembly, 2nd Regular Session
Last Updated October 15, 2008 at 3:10 pm