Full Text of HB5750 95th General Assembly
HB5750 95TH GENERAL ASSEMBLY
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95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008 HB5750
Introduced , by Rep. Deborah L. Graham SYNOPSIS AS INTRODUCED: |
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215 ILCS 157/20 |
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215 ILCS 157/22 |
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215 ILCS 157/25 |
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215 ILCS 157/30 |
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Amends the Credit Information in Personal Insurance Act. Provides that an insurer that uses credit information to underwrite risks shall not (i) take an adverse action against a consumer solely because he or she does not have a credit card account; (ii) take an adverse action against a consumer based on credit information, unless and until the insurer satisfies certain conditions, and (iii) use certain credit information as a negative factor in any insurance scoring methodology or in reviewing credit information for the purpose of underwriting or rating a policy of personal insurance. Provides that an insurer authorized to do business in this State may not take adverse action against a consumer who has tendered notice of an extraordinary life event unless and until the insurer has reviewed the consumer's notification and provided the consumer with a written explanation for its decision. Provides that if the insured has overpaid premium due to incorrect or incomplete credit information, the insurer shall refund to the insured the amount of overpayment calculated back to the shorter of either the last 12 months of coverage or the actual policy period. Provides that the insurer must provide the disclosure statement required under the provision each time the insurer obtains the consumer's credit report. Makes other changes. Effective immediately.
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A BILL FOR
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HB5750 |
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LRB095 16287 KBJ 42307 b |
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| AN ACT concerning regulation.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Use of Credit Information in Personal | 5 |
| Insurance Act is amended by changing Sections 20, 22, 25, and | 6 |
| 30 as follows:
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| (215 ILCS 157/20)
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| Sec. 20. Use of credit information. An insurer authorized | 9 |
| to do business
in this State that uses credit information to | 10 |
| underwrite or rate risks shall
not:
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| (1) Use an insurance score that is calculated using | 12 |
| income, gender,
address, ethnic group, religion, marital | 13 |
| status, or nationality of the consumer
as a factor.
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| (2) Deny, cancel, or nonrenew a policy of personal | 15 |
| insurance solely on
the basis of credit information, | 16 |
| without consideration of any other applicable
underwriting | 17 |
| factor independent of credit information and not expressly
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| prohibited by item (1). An insurer shall not be considered | 19 |
| to have denied,
cancelled, or nonrenewed a policy if | 20 |
| coverage is available through an
affiliate.
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| (3) Base an insured's renewal rates for personal | 22 |
| insurance solely upon
credit information, without | 23 |
| consideration of any other applicable factor
independent |
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LRB095 16287 KBJ 42307 b |
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| of credit information. An insurer shall not be considered | 2 |
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have based rates solely on credit information if | 3 |
| coverage is available in a
different tier of the same | 4 |
| insurer.
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| (4) Take an adverse action against a consumer solely | 6 |
| because he or she
does not have a credit card account , | 7 |
| without consideration of any other
applicable factor | 8 |
| independent of credit information .
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| (5) Consider an absence of credit information or an | 10 |
| inability to calculate
an insurance score in underwriting | 11 |
| or rating personal insurance, unless the
insurer does one | 12 |
| of the following:
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| (A) Treats the consumer as otherwise filed with the
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| Department, if the insurer presents information that | 15 |
| such
an absence or inability relates to the risk for | 16 |
| the insurer and submits a
filing certification form | 17 |
| signed by an officer for the insurer certifying that
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| such treatment is actuarially justified.
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| (B) Treats the consumer as if the applicant or | 20 |
| insured had neutral
credit information, as defined by | 21 |
| the insurer.
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| (C) Excludes the use of credit information as a | 23 |
| factor and uses only
other underwriting criteria.
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| (6) Take an adverse action against a consumer based on | 25 |
| credit
information, unless and until an insurer completes | 26 |
| all of the following: |
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| (i) obtains and uses a credit report issued or an
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| insurance score calculated within 90 days from the date | 3 |
| the policy is first
written or renewal is issued ; .
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| (ii) notifies the consumer, in writing, that the | 5 |
| insurer has obtained the consumer's credit report; | 6 |
| (iii) informs the consumer, in writing, what | 7 |
| information from the consumer's credit report would | 8 |
| trigger a potentially adverse action; and | 9 |
| (iv) offers the consumer an opportunity to | 10 |
| respond, within 30 days, to the negative or derogatory | 11 |
| information from the credit report. | 12 |
| The insurer shall then consider the consumer's | 13 |
| response prior to taking action. If the insurer decides to | 14 |
| take negative action, the insurer must communicate that | 15 |
| fact and its rationale for doing so in writing.
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| (7) Use credit information unless not later than every | 17 |
| 36 months
following the last time that the insurer obtained | 18 |
| current credit information
for the insured, the insurer | 19 |
| recalculates the insurance score or obtains an
updated | 20 |
| credit report. Regardless of the other requirements of this | 21 |
| Section:
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| (A) At annual renewal, upon the request of a | 23 |
| consumer or the consumer's
agent, the insurer shall | 24 |
| re-underwrite and re-rate the policy based upon a
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| current credit report or insurance score. An insurer | 26 |
| need not recalculate the
insurance score or obtain the |
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| updated credit report of a consumer more
frequently | 2 |
| than once in a 12-month period.
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| (B) The insurer shall have the discretion to obtain | 4 |
| current credit
information upon any renewal before the | 5 |
| expiration of 36 months, if
consistent with its | 6 |
| underwriting guidelines.
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| (C) An insurer is not required to obtain current | 8 |
| credit information for
an insured, despite the | 9 |
| requirements of subitem (A) of item (7) of this Section
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| if one of the following applies:
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| (a) The insurer is treating the consumer as | 12 |
| otherwise filed with
the Department.
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| (b) The insured is in the most | 14 |
| favorably-priced tier of the insurer,
within a | 15 |
| group of affiliated insurers. However, the insurer | 16 |
| shall have the
discretion to order credit | 17 |
| information, if consistent with its underwriting
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| guidelines.
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| (c) Credit was not used for underwriting or | 20 |
| rating the insured when
the policy was initially | 21 |
| written. However, the insurer shall have the
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| discretion to use credit for underwriting or | 23 |
| rating the insured upon renewal,
if consistent | 24 |
| with its underwriting guidelines.
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| (d) The insurer re-evaluates the insured | 26 |
| beginning no later than 36
months after inception |
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| and thereafter based upon other underwriting or | 2 |
| rating
factors, excluding credit information.
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| (8) Use the following as a negative factor in any | 4 |
| insurance scoring
methodology or in reviewing credit | 5 |
| information for the purpose of underwriting
or rating a | 6 |
| policy of personal insurance:
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| (A) Credit inquiries not initiated by the consumer | 8 |
| or inquiries
requested by the consumer for his or her | 9 |
| own credit information.
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| (B) Inquiries relating to insurance coverage, if | 11 |
| so identified on a
consumer's credit report.
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| (C) Collection accounts with a medical industry | 13 |
| code, if so identified
on the consumer's credit report.
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| (D) Multiple lender inquiries, if coded by the | 15 |
| consumer reporting agency
on the consumer's credit | 16 |
| report as being from the home mortgage industry and
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| made within 30 days of one another, unless only one | 18 |
| inquiry is considered.
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| (E) Multiple lender inquiries, if coded by the | 20 |
| consumer reporting agency
on the consumer's credit | 21 |
| report as being from the automobile lending industry
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| and made within 30 days of one another, unless only one | 23 |
| inquiry is considered.
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| (F) Any credit information that the consumer is | 25 |
| disputing or has disputed, or any credit information | 26 |
| for a dispute that is under review by the credit |
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| reporting agency or creditor. | 2 |
| (G) Information related to the financing of a | 3 |
| primary residence if the consumer occupies the | 4 |
| premises and is not in default on the financing | 5 |
| agreement. | 6 |
| (Source: P.A. 93-114, eff. 10-1-03; 93-477, eff. 10-1-03.)
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| (215 ILCS 157/22) | 8 |
| Sec. 22. Extraordinary life events. | 9 |
| (a) An insurer authorized to do business in this State that | 10 |
| uses credit information to underwrite or rate risks shall | 11 |
| review and consider an exception to the risk score based upon | 12 |
| extraordinary life events after receiving a written and signed | 13 |
| notification from the applicant or insured explaining how the | 14 |
| applicant or insured believes the extraordinary life event | 15 |
| adversely impacts the applicant's or insured's insurance risk | 16 |
| score. An insurer authorized to do business in this State may | 17 |
| not take adverse action against a consumer who has tendered | 18 |
| notice of an extraordinary life event unless and until the | 19 |
| insurer has reviewed the consumer's notification and provided | 20 |
| the consumer with a written explanation for its decision. | 21 |
| (b) For the purposes of this Section, "extraordinary life | 22 |
| event" means the following: | 23 |
| (1) a catastrophic illness or injury to an applicant or | 24 |
| insured or an immediate family member of an applicant or | 25 |
| insured; |
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LRB095 16287 KBJ 42307 b |
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| (2) the death of a spouse, child, or parent of an | 2 |
| applicant or insured; | 3 |
| (3) involuntary loss of employment for a period of 3 | 4 |
| months or more by an applicant or insured; | 5 |
| (4) identity theft of an applicant or insured; or | 6 |
| (5) dissolution of marriage of an applicant or insured.
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| (Source: P.A. 94-245, eff. 7-1-06 .)
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| (215 ILCS 157/25)
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| Sec. 25. Dispute resolution and error correction. If it is | 10 |
| determined
through any the
dispute resolution process , | 11 |
| including, but not limited to the process set forth in the | 12 |
| federal Fair Credit Reporting Act,
15 U.S.C.
1681i(a)(5), that | 13 |
| the credit information of a current insured was incorrect or
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| incomplete
and if the insurer receives notice of that | 15 |
| determination from either the
consumer reporting
agency or from | 16 |
| the insured, the insurer shall re-underwrite and re-rate the
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| consumer
within 30 days after receiving the notice. After | 18 |
| re-underwriting or re-rating
the
insured, the
insurer shall | 19 |
| make any adjustments necessary, consistent with its | 20 |
| underwriting
and rating
guidelines. If an insurer determines | 21 |
| that the insured has overpaid premium due to incorrect or | 22 |
| incomplete credit information , the
insurer
shall refund to the | 23 |
| insured the amount of overpayment calculated back to the
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| shorter of
either the last 12 months of coverage or the actual | 25 |
| policy period.
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LRB095 16287 KBJ 42307 b |
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| (Source: P.A. 93-114, eff. 10-1-03.)
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| (215 ILCS 157/30)
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| Sec. 30. Initial notification.
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| (a) If an insurer writing personal insurance uses credit | 5 |
| information in
underwriting or rating a consumer, the insurer | 6 |
| or its agent shall disclose,
either on the
insurance | 7 |
| application or at the time the insurance application is taken, | 8 |
| that
it may obtain
credit information in connection with the | 9 |
| application. The disclosure shall be
either
written or provided | 10 |
| to an applicant in the same medium as the application for
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| insurance.
The insurer must need not provide the disclosure | 12 |
| statement required under this
Section each time the insurer | 13 |
| obtains the consumer's credit report to any
insured on a | 14 |
| renewal policy, if the consumer has previously been provided a
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| disclosure
statement .
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| (b) Use of the following example disclosure statement | 17 |
| constitutes compliance
with this Section: "In connection with | 18 |
| this application for insurance, we may
review
your credit | 19 |
| report or obtain or use a credit-based insurance score based on | 20 |
| the
information
contained in that credit report. We may use a | 21 |
| third party in connection with
the
development of your | 22 |
| insurance score. Negative information obtained from your | 23 |
| credit report may cause you to pay higher insurance premiums. | 24 |
| Accordingly, you should be aware of the contents of your credit | 25 |
| report so that you can review it periodically. Federal law |
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HB5750 |
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LRB095 16287 KBJ 42307 b |
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| gives you the right to dispute inaccurate or incomplete | 2 |
| information on you credit reports. ".
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| (Source: P.A. 93-114, eff. 10-1-03.)
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| Section 99. Effective date. This Act takes effect upon | 5 |
| becoming law.
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