H. B. 2863
(By Delegate Poling)
[Introduced March 3, 2005; referred to the
Committee on Banking and Insurance then the Judiciary.]
A BILL to amend and reenact §33-20-3 of the Code of West Virginia,
1931, as amended, relating to prohibiting the use of credit
scoring as a consideration in calculating insurance rates in
homeowners or automobile liability policies.
Be it enacted by the Legislature of West Virginia:
That §33-20-3 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 20. RATES AND RATING ORGANIZATIONS.
§33-20-3. Rate making.
All rates shall be made in accordance with the following
provisions:
(a) Due consideration shall be given to past and prospective
loss experience within and outside this state, to catastrophe
hazards, if any, to a reasonable margin for underwriting profit and
contingencies, to dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or
subscribers, to past and prospective expenses both countrywide and
those specially applicable to this state, and to all other relevant
factors within and outside this state.
(b) Rates shall not be excessive, inadequate or unfairly
discriminatory.
(c) Rates for casualty and surety insurance to which this
article applies shall also be subject to the following provisions:
(1) The systems of expense provisions included in the rates
for use by any insurer or group of insurers may differ from those
of other insurers or groups of insurers to reflect the requirements
of the operating methods of any such insurer or group with respect
to any kind of insurance, or with respect to any subdivision or
combination thereof for which subdivision or combination separate
expense provisions are applicable.
(2) Risks shall be grouped by classifications and by
territorial areas for the establishment of rates and minimum
premiums. Classification of rates shall be modified to produce
rates for individual risks in a territorial area in accordance with
rating plans which establish standards for measuring variations in
hazards or expense provisions, or both. Such standards may measure
any differences among risks that can be demonstrated to have a
probable effect upon losses or expenses: Provided, That such
standards shall include the establishment of at least seven territorial rate areas within the state: Provided, further
however, That such territorial rate established by any insurer or
group of insurers may differ from those of other insurers or group
of insurers.
(3) Due consideration shall be given to such factors as
expense, management, individual experience, underwriting judgment,
degree or nature of hazard or any other reasonable considerations,
provided such factors apply to all risks under the same or
substantially the same circumstances or conditions.
(4) In the case of any homeowners or automobile liability
policy, credit scoring may not be considered as a factor to
calculate rates.
(d) Rates for fire and marine insurance to which this article
applies shall also be subject to the following provisions:
(1) Manual, minimum, class rates, rating schedules or rating
plans shall be made and adopted, except in the case of specific
inland marine rates on risks specially rated.
(2) Due consideration shall be given to the conflagration
hazard, and in the case of fire insurance rates consideration shall
be given to the experience of the fire insurance business during a
period of not less than the most recent five-year period for which
such experience is available.
(e) Except to the extent necessary to meet the provisions of
subdivisions (b) and (c) of this section, uniformity among insurers in any matters within the scope of this section is neither required
nor prohibited.
(f) Rates made in accordance with this section may be used
subject to the provisions of this article.
NOTE: The purpose of this bill is to prohibit the use of
credit scoring as a consideration in calculating insurance rates in
homeowners or automobile liability policies.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.