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HB-4594, As Passed House, June 7, 2012

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 4594

A bill to amend 1956 PA 218, entitled

"The insurance code of 1956,"

(MCL 500.100 to 500.8302) by adding sections 2153 and 2156.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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, credit information and 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.

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,

House Bill No. 4594 (S-1) as amended June 7, 2012

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.

Sec. 2156. If an insurer takes an adverse action based upon

credit information, the insurer shall notify the insured or

applicant for insurance in accordance with 15 USC 1681m(a), that an

adverse action has been taken. The insurer shall provide notice in

clear and specific language of the reasons for the adverse action,

including a description of all factors that were the primary or

most significant influences for the adverse action and the

insured's or the applicant's insurance score if not otherwise

provided. However, not more than 4 factors for the adverse action

need to be given. The use of generalized terms such as "poor credit

history", "poor credit rating", or "poor insurance score" does not

meet the description requirements of this section. Standardized

credit explanations provided by consumer reporting agencies or

other third party vendors meet the description requirements of this

section.

Enacting section 1. This amendatory act does not take effect

unless all of the following bills of the 96th Legislature are

enacted into law: