H. B. 2092
(By Delegates Rodighiero, Eldridge, Stephens, Miley,
Fleischauer, Longstreth, Boggs and Martin)
[Introduced January 13, 2010; referred to the
Committee on Banking and Insurance then the Judiciary.]
A BILL to amend and reenact §33-6B-3 of the Code of West Virginia,
1931, as amended; and to amend and reenact §33-20-3 and
§33-20-5 of the Code of West Virginia, 1931, as amended, all
relating to prohibiting the number of inquiries reflected in
a credit report, credit score report or CLUE report from
adversely affecting an application for insurance; to limiting
the use of a credit score to banking institution credit
scoring for casualty insurance rate filings; and prohibiting
reliance on information which is false or potentially false;
limiting the use of a credit score in casualty insurance rate
filings.
Be it enacted by the Legislature of West Virginia:
That §33-6B-3 of the Code of West Virginia, 1931, as amended,
be amended and reenacted; and that §33-20-3 and §33-20-5 of said
code be amended and reenacted, all to read as follows:
ARTICLE 6B. DECLINATION OF AUTOMOBILE LIABILITY INSURANCE.
§33-6B-3. Declinations; prohibited reasons.
The declination of an application for a private passenger
policy of automobile liability insurance by an insurer, agent or
broker is prohibited if the declination is:
(a) Based upon the race, religion, nationality or ethnic
group, of the applicant or named insured;
(b) Based solely upon the lawful occupation or profession of
the applicant or named insured, unless the decision is for a
business purpose that is not a mere pretext for unfair
discrimination:
Provided, That this provision does not apply to
any insurer, agent or broker that limits its market to one lawful
occupation or profession or to several related lawful occupations
or professions;
(c) Based upon the principal location of the insured motor
vehicle unless the decision is for a business purpose which is not
a mere pretext for unfair discrimination;
(d) Based solely upon the age, sex or marital status of an
applicant or an insured, except that this subsection does not
prohibit rating differentials based on age, sex or marital status;
(e) Based upon the fact that the applicant has previously
obtained insurance coverage with a substandard insurance carrier;
(f) Based upon the fact that the applicant has not previously
been insured;
(g) Based upon the fact that the applicant did not have
insurance coverage for a period of time prior to the application;
(h) Based upon the fact that the applicant or named insured
previously obtained insurance coverage through a residual market
insurance mechanism;
(i) Based upon the fact that another insurer previously
declined to insure the applicant or terminated an existing policy
in which the applicant was the named insured;
(j) Based solely upon an adverse credit report or adverse
credit scoring;
(k) Based, in any part, upon the number of inquiries reflected
in a credit report, credit score report or CLUE report or upon any
information contained in any of these reports, the accuracy of
which is disputed by the applicant.
(l) Nothing in this section may be construed to prohibit an
insurer, agent or broker from using legitimate, documented,
underwriting data in making their own independent risk assessment
of an applicant for insurance.
ARTICLE 20. RATES AND RATING ORGANIZATIONS.
§33-20-3. Ratemaking.
All rates
shall be are made in accordance with the following
provisions:
(a) Due consideration
shall be is 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
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 are grouped by classifications and by
territorial areas for the establishment of rates and minimum
premiums. Classification of rates
shall be are 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, 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 is 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 is given to the conflagration
hazard and in the case of fire insurance rates, consideration
shall
be is 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
insurance business.
(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
nor prohibited.
(g) Rates made in accordance with this section may be used
subject to the provisions of this article.
§33-20-5. Disapproval of filings.
(a) If within the waiting period or any extension
thereof of
it as provided in subsection (e) of section four of this article,
the commissioner finds that a filing does not meet the requirements
of this article, he
or she shall send to the insurer or rating
organization which made
such the filing, written notice of
disapproval of such filing specifying therein in what respects he
or she finds such filing fails to meet the requirements of this
article and stating that such filing shall not become effective.
(b) If within 30 days after a special surety filing subject to subsection (f) of section four of this article or if within 30 days
after a specific inland marine rate on a risk specially rated by a
rating organization subject to subsection (g) of section four of
this article has become effective, the commissioner finds that
such
the filing does not meet the requirements of this article, he
or
she shall send to the rating organization which made such filing
written notice of disapproval of such filing specifying therein in
what respects he
or she finds that such filing fails to meet the
requirements of this article and stating when, within a reasonable
period thereafter, such filing
shall be deemed is no longer
effective. Said disapproval shall not affect any contract made or
issued prior to the expiration of the period set forth in said
notice.
(c) If at any time subsequent to the applicable review period
provided
for in subsection (a) or (b) of this section, the
commissioner finds that a filing does not meet the requirements of
this article, he
or she shall, after notice and hearing to every
insurer and rating organization which made such filing, issue an
order specifying in what respects he
or she finds that such filing
fails to meet the requirements of this article, and stating when,
within a reasonable period thereafter, such filing
shall be deemed
is no longer effective. Copies of said order
shall be are sent to
every such insurer and rating organization. Said order shall not
affect any contract or policy made or issued prior to the expiration of the period set forth in said order.
(d) Any person or organization aggrieved with respect to any
filing which is in effect may demand a hearing thereon. If, after
such hearing, the commissioner finds that the filing does not meet
the requirements of this article, he
or she shall issue an order
specifying in what respects he
or she finds that such filing fails
to meet the requirements of this article, and stating when, within
a reasonable period thereafter, such filing shall be deemed no
longer effective. Said order shall not affect any contract or
policy made or issued prior to the expiration of the period set
forth in said order.
(e) Any insurer or rating organization, in respect to any
filing made by it which is not approved by the commissioner, may
demand a hearing thereon.
(f) No manual of classifications, rules, rating plans, or any
modification of any of the foregoing which establishes standards
for measuring variations in hazards or expense provisions, or both,
in the case of casualty insurance to which this article applies and
no manual, minimum, class rate, rating schedule, rating plan,
rating rule or any modification of any of the foregoing, in the
case of fire insurance to which this article applies, and which has
been filed pursuant to the requirements of section four of this
article,
shall be is disapproved if the rates thereby produced meet
the requirements of this article.
Provided, That none of the foregoing consider as a factor a credit score. If a credit score
is used as a factor in establishing a rating, only credit scores
from a banking institution as defined in section two, article one,
chapter thirty-one-A of the code may be used.
(g) If, in the opinion of the commissioner, the rate or form
filing made by an insurer is of such import that it will affect the
public he
or she may, at his
or her discretion, issue notice to
such insurer of a public hearing. The notice of public hearing to
the insurer making such form or rate filing
shall be is made by
United States mail at least 15 days prior to hearing date. Notice
to the public shall be given by appropriate publication in a
newspaper in the form and manner prescribed by chapter twenty-
nine-a of this code. The holding of a public hearing as outlined
in this subsection shall have the effect of eliminating the right
of the party making such filing to demand a hearing as stated in
subsections (d) and (e) of this section.
NOTE: The purpose of this bill is to limit the use of a credit
score to banking institution credit scoring for casualty insurance
rate filings; to prohibit the use of credit scoring as a
consideration in calculating insurance rates in homeowners or
automobile liability policies; and to prohibit the number of
inquiries reflected in a credit report, credit score report or CLUE
report from adversely affecting an application for insurance; and,
prohibiting reliance on information which is false or potentially
false.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.