WEST virginia Legislature
2017 regular session
By
[
to the Committee on Banking and Insurance then Finance.
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 said code, 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
the filing specifying therein in what respects he or she finds such
the filing fails to meet the requirements of this article and stating
that such the filing shall not become effective.
(b) If within thirty days after a special surety filing
subject to subsection (f) of section four of this article or if within thirty
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 the filing written notice
of disapproval of such the filing specifying therein in what
respects he or she finds that such the filing fails to
meet the requirements of this article and stating when, within a reasonable
period thereafter, such the filing shall be deemed is
no longer effective. Said The
disapproval shall not affect any contract made or issued prior to the
expiration of the period set forth in said the 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 the filing, issue an order
specifying in what respects he or she finds that such the
filing fails to meet the requirements of this article, and stating when, within
a reasonable period thereafter, such the filing shall be
deemed is no longer effective.
Copies of said the order shall be are sent to
every such insurer and rating organization which made the filing. Said The order shall not affect
any contract or policy made or issued prior to the expiration of the period set
forth in said the 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 the filing fails to meet the requirements
of this article, and stating when, within a reasonable period thereafter, such
the filing shall be deemed no longer effective. Said The order shall not affect
any contract or policy made or issued prior to the expiration of the period set
forth in said the 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 the
insurer of a public hearing. The notice
of public hearing to the insurer making such the form or rate
filing shall be is made by United States mail at least fifteen
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 the 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 a heading or the present law and underscoring
indicates new language that would be added.