375.918. Underwriting, use of credit scores, no adverse action permitted--definitions--disclosures.
Underwriting, use of credit scores, no adverse actionpermitted--definitions--disclosures.
375.918. 1. As used in this section, the following terms mean:
(1) "Adverse action", a denial, nonrenewal of, or a reduction in theamount of benefits payable or types of coverages under any contract, existingor applied for, in connection with the underwriting of insurance. An offer byan insurer to write a contract through an affiliated insurer does notconstitute an adverse action;
(2) "Contract", any automobile insurance policy as defined in section379.110, RSMo, or any property insurance policy as defined in section 375.001,including such a policy on a mobile home or residential condominium unit or apolicy of renters' or tenants' insurance. Contract shall not include anypolicy of mortgage insurance or commercial insurance;
(3) "Credit report", any written or electronic communication of anyinformation by a consumer reporting agency that:
(a) Bears on a person's credit worthiness, credit standing, or creditcapacity; and
(b) Is used or collected wholly or partly to serve as a factor in theunderwriting of a contract;
(4) "Credit scoring entity", any entity that is involved in creating,compiling, or providing insurance credit scores;
(5) "Insurance credit score", a numerical representation of theinsurance risk a person presents using the person's attributes derived from acredit report or credit information in a formula to assess insurance risk onan actuarial or statistical basis;
(6) "Insurer", any insurance company or entity that offers a contract;
(7) "Underwriting", the selection of the risk that will be assumed bythe insurer on a contract, and specifically the decision whether to accept,deny, renew, nonrenew, reduce, or increase the amount of benefits payable ortypes of coverages under the contract.
2. An insurer using a credit report or insurance credit score as afactor in underwriting shall not take an adverse action based on such factorwithout consideration of another noncredit-related underwriting factor.
3. No insurer shall take an adverse action against an applicant orinsured based on inability to compute an insurance credit score withoutconsideration of another underwriting factor, unless the insurer can justifythe credibility that the lack of an insurance credit score has in underwritingto the director of the department of insurance, financial institutions andprofessional registration.
4. An insurer using a credit report or insurance credit score as afactor in underwriting a contract shall disclose at the time of the originalapplication for the contract or on the application itself that the insurer maygather credit information.
5. An insurer using a credit report or insurance credit score as afactor in underwriting of a contract shall not take an adverse action on suchcontract based on information that is the subject of a written dispute betweenthe policyholder or applicant and a consumer reporting agency, as noted insuch person's credit report, until such dispute has reached finaldetermination in accordance with the federal Fair Credit Reporting Act, 15U.S.C. Section 1681, et seq. In the event that information is the subject ofa written dispute under this subsection, the sixty-day period provided bysection 375.002 or section 379.110, RSMo, shall be extended until fifteen daysafter the dispute reaches final determination. Nothing in this subsectionshall be construed to require any consumer reporting agency, as defined by thefederal Fair Credit Reporting Act, 15 U.S.C. Section 1681, et seq., toinclude any information on a credit report beyond the extent required by thefederal Fair Credit Reporting Act, 15 U.S.C. Section 1681, et seq.
6. If the use of a credit report or insurance credit score on a contractresults in an adverse action, the insurer shall provide the policyholder orapplicant:
(1) Notice that a credit report or insurance credit score adverselyaffected the underwriting of the contract;
(2) The name, address, and telephone number of the consumer creditreporting agency that furnished the credit information, in compliance with thenotice requirements of the federal Fair Credit Reporting Act, 15 U.S.C.Section 1681, et seq.;
(3) Notice of the right to obtain a free credit report from the consumercredit reporting agency within sixty days; and
(4) Notice of the right to lodge a dispute with the consumer creditreporting agency to have any erroneous information corrected in accordancewith the federal Fair Credit Reporting Act, 15 U.S.C. Section 1681, et seq.
7. Within thirty days from the date the insurer provides notice of anadverse action pursuant to subdivision (1) of subsection 6 of this section,the applicant or insured may in writing request from the insurer a statementof reasons for such action. For purposes of determining the thirty-dayperiod, the notice of an adverse action is deemed received three days aftermailing. The statement of reasons shall be sufficiently clear and specific sothat a person of average intelligence can identify the basis for the insurer'sdecision without further inquiry. An insurer may provide an explanation ofsignificant characteristics of the credit history that may have impacted suchperson's insurance credit score to meet the requirements of this subsection.Standardized credit explanations provided by credit scoring entities complywith this subsection.
8. If an insurer bases an adverse action in part on a credit report orinsurance credit score, the applicant or insured may within thirty days ofsuch adverse action make a written request for reunderwriting following anycorrection relating to the credit report or insurance credit score.
9. An insurer may obtain and use a current credit report or insurancecredit score on new business or renewal contracts, but shall not take anadverse action with respect to renewal contracts based upon such credit reportor insurance credit score until or after the third anniversary date of theinitial contract.
10. Insurance inquiries shall not directly or indirectly be used as anegative factor in any insurance credit scoring formula or in the use of acredit report in underwriting.
11. Nothing in this section shall be construed as superceding theprovisions of section 375.002 and section 379.114, RSMo. Nothing in thissection shall be construed as prohibiting any insurer from using creditinformation in determining whether to offer a policyholder or applicant theoption to finance or establish a payment plan for the payment of any premiumfor a contract. Nothing in this section shall apply to any entity not actingas an insurer or credit scoring entity as defined in subsection 1 of thissection.
12. No credit scoring entity shall provide or sell to any party, otherthan the insurer, its insurance company affiliates or holding companies, andthe producer from whom the inquiry was generated, data or lists that includeany information that in whole or in part is submitted in conjunction withcredit inquiries about consumers. Such information includes, but is notlimited to, expiration dates, information that may identify time periodsduring which a consumer's insurance may expire, or other nonpublic personalinformation as defined under the Gramm-Leach-Bliley Act, 15 U.S.C. Sections6801 to 6809. The provisions of this subsection shall not preclude theexchange of information specifically authorized under the federal Fair CreditReporting Act, 15 U.S.C. Section 1681, et seq., the Gramm-Leach-Bliley Act, 15U.S.C. Sections 6801 to 6809 and other applicable federal law. The provisionsof this subsection shall not apply to data disclosed in connection with aproposed or actual sale, merger, transfer or exchange of all or a portion ofan insurer's or producer's business or operating unit, including but notlimited to, the sale of a portfolio of contracts, if such disclosure concernssolely consumers of the business or unit and such disclosure is not theprimary reason for the sale, merger, transfer or exchange.
13. A violation of this section may be enforceable under section374.280, RSMo.
14. The provisions of this section shall apply to all contracts enteredinto on or after July 1, 2003.
(L. 2002 H.B. 1502 & 1821)