Enrolled HB 195: Relating to insurer actions based on credit history and insurance scores at insurance policy renewal; and providing for insurer consideration of consumer requests for exceptions of credit history or insurance scores.
00Enrolled HB 195 01 Relating to insurer actions based on credit history and insurance scores at insurance policy 02 renewal; and providing for insurer consideration of consumer requests for exceptions of credit 03 history or insurance scores. 04 _______________ 05 * Section 1. AS 21.36.460(a) is amended to read: 06 (a) If an insurer writing personal insurance uses credit information in 07 underwriting or rating a consumer, the insurer shall disclose, either on the insurance 08 application or [,] at the time the insurance application is taken, and at the time of 09 renewal, that the insurer will obtain credit information in connection with the 10 application or renewal. The disclosure required under this subsection shall be in 11 writing or in the same medium as the application for insurance or the notice of 12 renewal. Use of the following statement constitutes compliance with this subsection: 13 "In connection with this application for insurance or notice of renewal, we will 14 review your credit report or obtain or use a credit-based insurance score based on the
01 information contained in your credit report. We may use this information to decide 02 whether to insure you or how much to charge." If an insurer uses a third party to 03 calculate the consumer's [APPLICANT'S] insurance score, the disclosure required 04 under this subsection must also contain language similar to: "We may use a third party 05 in connection with the development of your insurance score." 06 * Sec. 2. AS 21.36.460(b) is amended to read: 07 (b) An insurer that takes adverse action involving personal insurance against a 08 consumer based in whole or in part on credit history or insurance score shall provide 09 notice of the adverse action, in writing, to the consumer [THE OPPORTUNITY TO 10 REQUEST RECONSIDERATION OF THE ADVERSE ACTION AND PROVIDE 11 WRITTEN NOTICE TO THE APPLICANT OR NAMED INSURED]. The notice 12 must 13 (1) clearly and specifically state the significant factors of the credit 14 history or insurance score that resulted in the adverse action, in a manner that allows 15 the consumer to identify the basis for the adverse action; 16 (2) inform the consumer that the consumer is entitled to 17 (A) request reconsideration of the adverse action; and 18 (B) a free copy of the consumer's report under 15 U.S.C. 1681 19 et seq. (Fair Credit Reporting Act); 20 (3) inform the consumer that the consumer has the right to correct 21 errors in the credit report; 22 (4) advise the consumer on ways to improve the consumer's insurance 23 score; [AND] 24 (5) provide information to assist the consumer with the error correction 25 process; and 26 (6) inform the consumer 27 (A) that reasonable exceptions to the insurer's rates, rating 28 classifications, company or tier placement, or underwriting rules or 29 guidelines are available for a consumer who has experienced, and whose 30 credit history has been affected by, one or more extraordinary life 31 circumstances listed under AS 21.36.461;
01 (B) how the consumer may request an exception from the 02 insurer; and 03 (C) that, for a request for an exception to be considered by 04 the insurer, the consumer must submit the request to the insurer not later 05 than 60 days after receiving the notice under this subsection. 06 * Sec. 3. AS 21.36.460(c) is amended to read: 07 (c) An insurer may use a consumer's credit history or insurance score to 08 cancel, deny, nonrenew, underwrite, or rate personal insurance only in combination 09 with other substantive underwriting factors. If an insurer uses a consumer's credit 10 history or insurance score, not later than 24 months after the insurer most 11 recently used the consumer's credit history or insurance score to underwrite or 12 rate a policy, the insurer shall reunderwrite and rerate the policy based on the 13 consumer's current 14 (1) credit history or insurance score and current risk 15 characteristics; or 16 (2) risk characteristics but not including, in whole or in part, the 17 consumer's credit history or insurance score; for [FOR] the purposes of this 18 subsection, 19 (A) [(1)] refusal to offer personal insurance coverage to a 20 consumer constitutes denial of personal insurance; and 21 (B) [(2)] an offer of placement with an affiliate insurer does not 22 constitute denial of coverage. 23 * Sec. 4. AS 21.36.460(d) is amended to read: 24 (d) An insurer may not 25 (1) [FAIL TO RENEW OR, AT RENEWAL, AGAIN 26 UNDERWRITE OR RATE A PERSONAL INSURANCE POLICY BASED IN 27 WHOLE OR IN PART ON A CONSUMER'S CREDIT HISTORY OR INSURANCE 28 SCORE; THE PROHIBITION IN THIS PARAGRAPH AGAINST 29 UNDERWRITING OR RATING A PERSONAL INSURANCE POLICY AT 30 RENEWAL MAY BE WAIVED BY THE CONSUMER; WAIVER ALLOWED 31 UNDER THIS PARAGRAPH MUST OCCUR AT EACH RENEWAL;
01 (2)] cancel, deny, nonrenew, underwrite, or rate personal insurance 02 coverage based in whole or in part on 03 (A) the absence of credit history or the inability to determine 04 the consumer's credit history if the insurer has received accurate and complete 05 information from the consumer; this subparagraph does not apply if the insurer 06 treats the consumer as if the consumer had neutral credit information as 07 approved by the director; 08 (B) credit inquiries not initiated by the consumer; 09 (C) credit inquiries relating to insurance coverage if identified 10 on a consumer's credit report; 11 (D) credit inquiries by the consumer for the consumer's own 12 credit information; 13 (E) multiple lender inquiries if coded on the consumer's credit 14 report as being for automobile, boat, recreation vehicle, or home mortgage 15 loans, unless all inquiries under that code within a 30-day period are counted 16 as one; 17 (F) credit history or an insurance score based on collection 18 accounts identified with a medical industry code; 19 (G) the consumer's use of a particular type of credit card, 20 charge card, or debit card or the absence of a credit card; 21 (H) the consumer's total available line of credit; however, the 22 consumer's ratio of debt to total available line of credit may be considered; 23 (I) the age of the most recent automobile or home loan obtained 24 by the consumer; however, an insurer may consider the bill payment history or 25 total number of loans; or 26 (J) the person's age when credit is established; 27 (2) [(3)] use the credit history of the consumer when the consumer is 28 adversely affected by a joint account owner who was the spouse of the consumer or a 29 joint account owner who is the spouse of the consumer and who is a party to a divorce 30 or dissolution action against the consumer; this paragraph applies only if the consumer 31 provides written notice to the insurer that identifies the credit information that is
01 adversely affected by the joint account owner; this paragraph does not prevent the use 02 of credit history that is not identified by the consumer as required by this paragraph; 03 (3) [(4)] use an insurance score that is calculated using the income, 04 age, sex, address, zip code, census block, ethnic group, religion, marital status, or 05 nationality of the consumer as a factor; 06 (4) [(5)] use credit history to cancel, deny, nonrenew, underwrite, or 07 rate a personal insurance policy [DETERMINE AN INSURANCE SCORE] if the 08 history is obtained more than 90 days before the policy is cancelled, denied, 09 nonrenewed, underwritten, or rated; this paragraph does not require an insurer 10 to reevaluate a consumer's credit history more frequently than is required under 11 (c) of this section [ISSUED]; 12 (5) [(6)] use an insurance score derived from an insurance scoring 13 model to determine eligibility for an insurance payment plan; this paragraph does not 14 prohibit the use of credit history to evaluate the ability of the consumer to make 15 payments. 16 * Sec. 5. AS 21.36 is amended by adding a new section to read: 17 Sec. 21.36.461. Extraordinary life circumstances. (a) Except as provided in 18 AS 21.36.460(d), an insurer that uses a consumer's credit history or insurance score 19 shall provide reasonable exceptions to the insurer's rates, rating classifications, 20 company or tier placement, or underwriting rules or guidelines for a consumer who 21 has experienced, and whose credit history or insurance score has been affected by, one 22 or more of the following extraordinary life circumstances: 23 (1) a catastrophe, as declared by the director under AS 21.06.080; 24 (2) a serious illness or injury, or a serious illness of or injury to an 25 immediate family member; 26 (3) the death of a spouse, child, or parent; 27 (4) divorce or the involuntary interruption of spousal support or 28 maintenance payments; 29 (5) identity theft; 30 (6) loss of employment for three months or more as a result of 31 involuntary termination;
01 (7) military overseas deployment; or 02 (8) other extraordinary life circumstances where a prudent person 03 would consider an exception to the insurer's rates, rating classifications, company or 04 tier placement, or underwriting rules or guidelines to be reasonable. 05 (b) If a consumer submits a request for an exception under AS 21.36.460(b), 06 an insurer may require the consumer to 07 (1) provide reasonable written and independently verifiable 08 documentation of the extraordinary life circumstances; 09 (2) demonstrate that the circumstances had a direct and meaningful 10 effect on the consumer's credit information. 11 (c) If a consumer submits a request for an exception under AS 21.36.460(b), 12 an insurer may 13 (1) grant an exception; 14 (2) grant an exception if the consumer asks for consideration of 15 repeated events; and 16 (3) grant an exception if the insurer previously had considered a 17 request. 18 (d) An insurer may not be considered out of compliance with a law or rule 19 relating to underwriting, rating, or rate filing as a result of granting an exception under 20 this section. 21 (e) Not later than 30 days after the insurer receives sufficient documentation 22 of the information requested from the consumer under (b) of this section, the insurer 23 shall provide notice to the consumer, in writing, that the exception is 24 (1) granted and the adverse action will not be taken; or 25 (2) denied and the adverse action will be maintained. 26 (f) If an exception is denied and the adverse action will be maintained, the 27 insurer's notice under (e) of this section must include 28 (1) the insurer's reason for denying the request for an exception and for 29 maintaining the adverse action; and 30 (2) information notifying the consumer of the consumer's right to 31 appeal the adverse action resulting from the denial of the consumer's request for an
01 exception to the director. 02 (g) A consumer, aggrieved by an adverse action resulting from the denial of 03 the consumer's request for an exception may appeal the adverse action to the director 04 not later than 30 days after receiving the insurer's notice under (e) of this section. The 05 appeal must include the consumer's reason for opposing the adverse action and for 06 requesting the exception. 07 (h) The director shall make a decision on the consumer's appeal not later than 08 30 days after receiving the appeal and shall provide the decision to both the insurer 09 and the consumer. The decision must include an explanation of the decision and must 10 be based on 11 (1) what a prudent person would consider to be a fair and reasonable 12 decision given the consumer's circumstances; and 13 (2) the record, which must be limited to the following: 14 (A) the insurer's notice of adverse action provided to the 15 consumer under AS 21.36.460(b); 16 (B) the consumer's request for an exception submitted to the 17 insurer under AS 21.36.460(b); 18 (C) any information submitted by the consumer to the insurer 19 under (b) of this section; 20 (D) the insurer's notice provided to the consumer under (e) of 21 this section; 22 (E) the consumer's appeal submitted to the director under (g) of 23 this section; and 24 (F) if requested by the director, additional information 25 necessary to make a fair and reasonable decision. 26 (i) The hearing and appeal procedures provided for in AS 21.06.180 - 27 21.06.230 do not apply to consumer appeals submitted to the director under (g) of this 28 section. 29 (j) Nothing in this section may be construed to provide a consumer with a 30 cause of action that does not exist in the absence of this section. 31 (k) In this section,
01 (1) "adverse action" is limited to an adverse action defined in 02 AS 21.36.460(i) that is based, in whole or in part, on the consumer's credit history or 03 insurance score as affected by one or more extraordinary life circumstances; 04 (2) "consumer" has the meaning given in AS 21.36.460(i). 05 * Sec. 6. AS 44.64.030(a) is amended to read: 06 (a) The office shall conduct all adjudicative administrative hearings required 07 under the following statutes or under regulations adopted to implement the statutes: 08 (1) AS 04.11.510(b)(1) and (c) (alcoholic beverages license); 09 (2) AS 05.15 (charitable gaming); 10 (3) AS 05.20 (recreational devices); 11 (4) AS 05.90.001 (special racing events); 12 (5) AS 06 (banks, financial institutions, and fund claims), except as 13 provided otherwise by AS 06.60.590; 14 (6) AS 08 (occupational licensing), other than AS 08.08, 15 AS 08.18.125, and AS 08.62.046; 16 (7) AS 10.06 (Alaska Corporations Code); 17 (8) AS 10.13 (Alaska BIDCO Act); 18 (9) AS 10.25.375 (Electric and Telephone Cooperative Act); 19 (10) AS 10.50.408 (limited liability companies); 20 (11) AS 14.11.016 (education-related facility grants); 21 (12) AS 14.18 (discrimination in public education); 22 (13) AS 14.25.006 (teachers' retirement system); 23 (14) AS 14.25.175 (waiver of adjustments under teachers' defined 24 benefit plan); 25 (15) AS 14.40.155 (suspension and removal of regents); 26 (16) AS 14.48 (postsecondary educational institutions); 27 (17) AS 17.20 (Alaska Food, Drug, and Cosmetic Act), other than 28 AS 17.20.060 and 17.20.360; 29 (18) AS 18.07 (certificate of need program); 30 (19) AS 18.20 (hospitals and nursing facilities); 31 (20) AS 21.09, AS 21.22.190, AS 21.27, except under
01 AS 21.27.420(d), AS 21.34, AS 21.36, except under AS 21.36.461, AS 21.69, 02 AS 21.86.200, AS 21.87, and AS 21.96 (insurance); 03 (21) AS 25.27 (child support services); 04 (22) AS 32.06 (Uniform Partnership Act); 05 (23) AS 34.45 (unclaimed property); 06 (24) AS 34.55.024 and 34.55.026 (Uniform Land Sales Practices Act); 07 (25) AS 36.30 (State Procurement Code), other than 08 AS 36.30.627(a)(2); 09 (26) AS 38.05.065 (contracts for sale of state land); 10 (27) AS 39.30.165 (supplemental benefits system); 11 (28) AS 39.30.335 (teachers' and public employees' health 12 reimbursement arrangement plan); 13 (29) AS 39.35.006 (public employees' retirement system); 14 (30) AS 39.35.522 (waiver of adjustments under public employees' 15 defined benefit plan); 16 (31) AS 39.45.055 (public employees' deferred compensation 17 program); 18 (32) AS 39.52 (Alaska Executive Branch Ethics Act); 19 (33) AS 43.23 (permanent fund dividends); 20 (34) AS 43.70 (Alaska Business License Act); 21 (35) AS 44.50 (notaries public); 22 (36) AS 44.77 (claims against the state); 23 (37) AS 45.30.040 (mobile homes); 24 (38) AS 45.48.080(c) (breach of security involving personal 25 information); 26 (39) AS 45.55 (Alaska Securities Act); 27 (40) AS 45.57 (Takeover Bid Disclosure Act); 28 (41) AS 46 (water, air, energy, and environmental conservation), other 29 than AS 46.03.820, 46.03.850, AS 46.39, and AS 46.40; 30 (42) AS 47.05 (assistance programs); 31 (43) AS 47.07 (medical assistance for needy persons);
01 (44) AS 47.25 (public assistance); 02 (45) AS 47.27 (Alaska temporary assistance program); 03 (46) AS 47.32 (licensing by the Department of Health and Social 04 Services); 05 (47) AS 47.37.130 (alcohol safety action program); 06 (48) AS 47.37.140 (treatment facilities); 07 (49) AS 47.45.050 (longevity bonuses); 08 (50) AS 47.45.306 (Alaska senior benefits payment program).