H. B. 2451
(By Delegate Barker)
[Introduced February 16, 2009; 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.
All rates shall be made in accordance with the following
(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 may not be excessive, inadequate or unfairly
(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,
standards shall include the establishment of at least seven territorial rate areas within the state: Provided, however,
such territorial rate established by any insurer or group of
insurers may differ from those of other insurers or group of
(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 after two consecutive years of coverage with the
(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) Rates for title insurance to which this article applies shall also be subject to the following provisions:
(1) Title insurance rates shall be reasonable and adequate for
the class of risks to which they apply. Rates may not be unfairly
discriminatory between risks involving essentially the same hazards
and expense elements. The rates may be fixed in an amount
sufficient to furnish a reasonable margin for profit after
provisions to account for: (i) Probable losses as indicated by
experience within and without this state; (ii) exposure to loss
under policies; (iii) allocations to reserves; (iv) costs
participating insurance; (v) operating costs; and (vi) other items
of expense fairly attributable to the operation of a title
(2) (A) Policies may be grouped into classes for the
establishment of rates. A title insurance policy that is unusually
hazardous to the title insurance company because of an alleged
defect or irregularity in the title insured or because of
uncertainty regarding the proper interpretation or application of
the law involved may be classified separately according to the
facts of each case.
(B) Title insurance companies shall file separate rate
schedules for commercial and noncommercial risks. The Insurance
Commissioner shall promulgate rules regarding the requirements of
this subsection which shall give due consideration to the nature of
commercial transactions and the need for greater protections for consumers in noncommercial transactions.
(3) Title insurance rates may not include charges for
abstracting, record searching, certificates regarding the record
title, escrow services, closing services and other related services
that may be offered or furnished or the cost and expenses of
examinations of titles.
(f) 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
(g) 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