96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB0418

 

Introduced 2/3/2009, by Rep. Monique D. Davis

 

SYNOPSIS AS INTRODUCED:
 
205 ILCS 635/5-10.5 new
215 ILCS 157/20
220 ILCS 5/8-101.5 new

    Amends the Residential Mortgage License Act of 1987. In a Section concerning lending procedures, provides that a licensee may not deny an application for a mortgage solely on the basis of credit information of prospective customers. Provides that if a licensee denies a mortgage application based on credit information, it must provide the affected party with an explanation for the licensee's action and an opportunity for the affected party to explain its credit information. Amends the Use of Credit Information in Personal Insurance Act. In a Section concerning the use of personal credit information, provides that if an insurer denies, cancels, or does not renew a policy of personal insurance based on credit information, it must provide the affected party with an explanation for the insurer's action and an opportunity for the affected party to explain its credit information. Amends the Public Utilities Act. Provides that a public utility may not deny, cancel, or nonrenew utility service solely on the basis of credit information of prospective or existing customers. Provides that if a public utility denies, cancels, or does not renew service based on credit information, it must provide the affected party with an explanation for the public utility's action and an opportunity for the affected party to explain its credit information. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB0418 LRB096 07541 MJR 17636 b

1     AN ACT concerning regulation.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Residential Mortgage License Act of 1987 is
5 amended by adding Section 5-10.5 as follows:
 
6     (205 ILCS 635/5-10.5 new)
7     Sec. 5-10.5. Licensee actions with respect to credit
8 information. A licensee may not deny an application for a
9 mortgage solely on the basis of credit information of
10 prospective customers. If a licensee denies a mortgage
11 application based on credit information, it must provide the
12 affected party with an explanation for the licensee's action
13 and an opportunity for the affected party to explain its credit
14 information.
 
15     Section 10. The Use of Credit Information in Personal
16 Insurance Act is amended by changing Section 20 as follows:
 
17     (215 ILCS 157/20)
18     Sec. 20. Use of credit information. An insurer authorized
19 to do business in this State that uses credit information to
20 underwrite or rate risks shall not:
21         (1) Use an insurance score that is calculated using

 

 

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1     income, gender, address, ethnic group, religion, marital
2     status, or nationality of the consumer as a factor.
3         (2) Deny, cancel, or nonrenew a policy of personal
4     insurance solely on the basis of credit information,
5     without consideration of any other applicable underwriting
6     factor independent of credit information and not expressly
7     prohibited by item (1). An insurer shall not be considered
8     to have denied, cancelled, or nonrenewed a policy if
9     coverage is available through an affiliate. If an insurer
10     denies, cancels, or does not renew a policy of personal
11     insurance based on credit information, it must provide the
12     affected party with an explanation for the insurer's action
13     and an opportunity for the affected party to explain its
14     credit information.
15         (3) Base an insured's renewal rates for personal
16     insurance solely upon credit information, without
17     consideration of any other applicable factor independent
18     of credit information. An insurer shall not be considered
19     to have based rates solely on credit information if
20     coverage is available in a different tier of the same
21     insurer.
22         (4) Take an adverse action against a consumer solely
23     because he or she does not have a credit card account,
24     without consideration of any other applicable factor
25     independent of credit information.
26         (5) Consider an absence of credit information or an

 

 

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1     inability to calculate an insurance score in underwriting
2     or rating personal insurance, unless the insurer does one
3     of the following:
4             (A) Treats the consumer as otherwise filed with the
5         Department, if the insurer presents information that
6         such an absence or inability relates to the risk for
7         the insurer and submits a filing certification form
8         signed by an officer for the insurer certifying that
9         such treatment is actuarially justified.
10             (B) Treats the consumer as if the applicant or
11         insured had neutral credit information, as defined by
12         the insurer.
13             (C) Excludes the use of credit information as a
14         factor and uses only other underwriting criteria.
15         (6) Take an adverse action against a consumer based on
16     credit information, unless an insurer obtains and uses a
17     credit report issued or an insurance score calculated
18     within 90 days from the date the policy is first written or
19     renewal is issued.
20         (7) Use credit information unless not later than every
21     36 months following the last time that the insurer obtained
22     current credit information for the insured, the insurer
23     recalculates the insurance score or obtains an updated
24     credit report. Regardless of the other requirements of this
25     Section:
26             (A) At annual renewal, upon the request of a

 

 

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1         consumer or the consumer's agent, the insurer shall
2         re-underwrite and re-rate the policy based upon a
3         current credit report or insurance score. An insurer
4         need not recalculate the insurance score or obtain the
5         updated credit report of a consumer more frequently
6         than once in a 12-month period.
7             (B) The insurer shall have the discretion to obtain
8         current credit information upon any renewal before the
9         expiration of 36 months, if consistent with its
10         underwriting guidelines.
11             (C) An insurer is not required to obtain current
12         credit information for an insured, despite the
13         requirements of subitem (A) of item (7) of this Section
14         if one of the following applies:
15                 (a) The insurer is treating the consumer as
16             otherwise filed with the Department.
17                 (b) The insured is in the most
18             favorably-priced tier of the insurer, within a
19             group of affiliated insurers. However, the insurer
20             shall have the discretion to order credit
21             information, if consistent with its underwriting
22             guidelines.
23                 (c) Credit was not used for underwriting or
24             rating the insured when the policy was initially
25             written. However, the insurer shall have the
26             discretion to use credit for underwriting or

 

 

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1             rating the insured upon renewal, if consistent
2             with its underwriting guidelines.
3                 (d) The insurer re-evaluates the insured
4             beginning no later than 36 months after inception
5             and thereafter based upon other underwriting or
6             rating factors, excluding credit information.
7         (8) Use the following as a negative factor in any
8     insurance scoring methodology or in reviewing credit
9     information for the purpose of underwriting or rating a
10     policy of personal insurance:
11             (A) Credit inquiries not initiated by the consumer
12         or inquiries requested by the consumer for his or her
13         own credit information.
14             (B) Inquiries relating to insurance coverage, if
15         so identified on a consumer's credit report.
16             (C) Collection accounts with a medical industry
17         code, if so identified on the consumer's credit report.
18             (D) Multiple lender inquiries, if coded by the
19         consumer reporting agency on the consumer's credit
20         report as being from the home mortgage industry and
21         made within 30 days of one another, unless only one
22         inquiry is considered.
23             (E) Multiple lender inquiries, if coded by the
24         consumer reporting agency on the consumer's credit
25         report as being from the automobile lending industry
26         and made within 30 days of one another, unless only one

 

 

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1         inquiry is considered.
2 (Source: P.A. 93-114, eff. 10-1-03; 93-477, eff. 10-1-03.)
 
3     Section 15. The Public Utilities Act is amended by adding
4 Section 8-101.5 as follows:
 
5     (220 ILCS 5/8-101.5 new)
6     Sec. 8-101.5. Use of credit information of prospective and
7 existing customers. A public utility may not deny, cancel, or
8 nonrenew utility service solely on the basis of credit
9 information of prospective or existing customers. If a public
10 utility denies, cancels, or does not renew service based on
11 credit information, it must provide the affected party with an
12 explanation for the public utility's action and an opportunity
13 for the affected party to explain its credit information.
 
14     Section 99. Effective date. This Act takes effect upon
15 becoming law.