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30th Legislature(2017-2018)

Bill Text 30th Legislature

00 Enrolled 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).                                            
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