SCS/HS/HCS/HBs 1502 & 1821 - This act restricts how insurance companies may use an applicant's credit information in their underwriting practices in automobile and property insurance.

The act prohibits insurers from taking an adverse action against an applicant or insured based upon credit information when: (1) credit information is the only underwriting factor; (2) using information contained in a credit report that the insurance company knows to be in dispute; or (3) renewing a contract, until the third anniversary date of such a contract.

The act prohibits insurance companies from: (1) providing credit information to third parties, unless specifically authorized by the federal Fair Credit Reporting Act; and (2) using the number of insurance inquiries an applicant makes as a negative factor in their insurance scoring formulas.

This act requires insurance companies to: (1) inform the applicant, at the time of application, if credit information may be used as an underwriting factor; (2) inform the applicant about his or her rights regarding their credit information when a credit report adversely affects the applicant; and (3) provide to the applicant or insured a statement of reasons for taking any adverse action which was based upon credit information if the insured or applicant requests such a statement within 30 days of the adverse action. The statement must be clear and specific, so that a person of average intelligence can identify the basis for the insurer's decision without further inquiry. Applicants and insureds may request reevaluation within 30 days following any correction to their credit report.

The provisions of this act applies to automobile and property insurance contracts entered into on or after July 1, 2003.

The provisions of this act are similar to those contained in SB 981 and SB 1215 (2002).
STEPHEN WITTE