April 28, 2011, Introduced by Reps. Opsommer, Glardon, Howze, Shaughnessy, Roy Schmidt, Johnson, Hooker, Rendon, Kandrevas and LeBlanc and referred to the Committee on Insurance.
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.
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 credit information 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 approved by the office of
financial and insurance regulation as reasonably justified by
differences in losses, expenses, or both, or the insured or
insurance applicant receives a discount that is not less 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 request of an insured or the insured's producer at
annual renewal, or upon request of an insured during the course of
the policy, an insurer or a third party on the insurer's behalf
shall reexamine a current credit report or insurance score. An
insurer or a third party on the insurer's behalf is not required to
recalculate the insurance score or obtain a new credit report 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 January 1, 2012, 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) The number, if under 2, of credit or charge card accounts
opened by a consumer in the immediately preceding 12 months that
have credit limits under $1,001.00.
(vi) 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 and 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 influences for
the adverse action and the names of all credit reports used.
However, not more than 5 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:
(a) Senate Bill No.____ or House Bill No. 4593(request no.
01364'11).
(b) Senate Bill No.____ or House Bill No. 4596(request no.
01985'11).
(c) Senate Bill No.____ or House Bill No. 4595(request no.
02442'11).