Bill Text: FL S0102 | 2012 | Regular Session | Comm Sub
Bill Title: Credit Reports
Spectrum:
Status: (Failed) 2012-03-09 - Died in Banking and Insurance [S0102 Detail]
Download: Florida-2012-S0102-Comm_Sub.html
Florida Senate - 2012 CS for SB 102 By the Committee on Commerce and Tourism; and Senator Siplin 577-02029-12 2012102c1 1 A bill to be entitled 2 An act relating to credit reports; prohibiting an 3 employer from using a job applicant’s credit report or 4 credit history to make certain hiring, compensation, 5 or other employment decisions; providing specific 6 situations where an employer may use such information; 7 providing definitions; providing exemptions for 8 certain types of employers; providing remedies for 9 aggrieved persons; providing for court costs; 10 providing for a plaintiff to post a bond in certain 11 situations; amending s. 626.9541, F.S.; prohibiting an 12 insurer using a rate, rating schedule, rating manual, 13 or an underwriting rule that is not contained in a 14 rating manual and is determined in whole or in part on 15 the basis of a credit report or credit score of an 16 insured; including the refusal to insure or continue 17 to insure any individual or risk because of the 18 insured’s or applicant’s credit report or credit score 19 among the list of activities constituting unfair 20 methods of competition and unfair or deceptive acts; 21 amending s. 626.9741, F.S.; prohibiting the use by 22 insurers of credit reports and credit scores in making 23 rating determinations; deleting provisions limiting 24 and regulating the use of credit scores by insurers 25 when making rating determinations; deleting the 26 definitions of the terms “adverse decision” and 27 “tier”; providing an effective date. 28 29 Be It Enacted by the Legislature of the State of Florida: 30 31 Section 1. Use of a job applicant’s credit report or credit 32 history.— 33 (1) Except as provided in subsection (2), an employer may 34 not use an applicant’s credit report or credit history for the 35 purpose of denying employment to the applicant or for 36 determining the applicant’s compensation or the terms, 37 conditions, or privileges of employment. 38 (2) An employer may request or use an applicant’s credit 39 report or credit history if: 40 (a) The information will be used for a purpose other than 41 one prohibited by this section; 42 (b) The employer has a bona fide purpose for requesting or 43 using information in the credit report or credit history which 44 is substantially related to the job; and 45 (c) The ability to request such information was disclosed 46 to the applicant and the employer obtained permission from the 47 applicant to request the information. 48 (3) For purposes of this section, a position for which an 49 employer has a bona fide purpose includes a position that: 50 (a) Is managerial or supervisory; 51 (b) Involves access to personal information of a customer, 52 employee, or employer, except for personal information 53 customarily provided in a retail transaction; 54 (c) Involves a fiduciary responsibility to the employer, 55 including the authority to issue payments, collect debts, 56 transfer money, or enter into contracts; 57 (d) Involves the use of an expense account or a corporate 58 debit or credit card; 59 (e) Authorizes the employee to have access to information, 60 including a trade secret, formula, pattern, compilation, 61 program, device, method, technique, or process that derives 62 actual or potential independent economic value from not being 63 generally known to, and not being readily ascertainable by 64 proper means by, other persons who can obtain economic value 65 from the disclosure or use of the information and is the subject 66 of efforts that are reasonable under the circumstances to 67 maintain its secrecy; or 68 (f) Involves public safety, such as a law enforcement 69 officer, peace officer, or other position involving enforcement 70 of state or federal criminal laws. 71 (4) As used in paragraph (3)(a), the term: 72 (a) “Managerial” means a position that requires an 73 individual to formulate and effectuate management policies by 74 expressing and making operative the decisions of the employer. 75 (b) “Supervisory” means a position in which an individual 76 has the authority, in the interest of the employer, to hire, 77 transfer, suspend, lay off, recall, promote, discharge, assign, 78 reward, or discipline other employees, or the responsibility to 79 direct them, adjust their grievances, or recommend such action 80 where the authority or responsibility is not merely routine or 81 clerical, but requires the use of independent judgment. 82 (5) This section does not apply to an employer that is: 83 (a) Expressly permitted or required to inquire into an 84 applicant’s credit report or credit history for employment 85 purposes pursuant to a federal or state law. 86 (b) A financial institution that accepts deposits that are 87 insured by a federal agency, or an affiliate or subsidiary of 88 the financial institution. 89 (c) A credit union or state-chartered bank registered with 90 the Office of Financial Regulation. 91 (d) An entity that is registered as an investment advisor 92 with the United States Securities and Exchange Commission, or an 93 affiliate of the entity. 94 (6)(a) Without regard to any other remedy or relief to 95 which a person is entitled, a person aggrieved by a violation of 96 this section may bring an action to obtain a declaratory 97 judgment that an act or practice violates this section and to 98 enjoin the violator from further violations. 99 (b) A person who has suffered a loss as a result of a 100 violation of this section and prevails may recover actual 101 damages, plus court costs. 102 (c) In any action brought under this section, upon motion 103 of the defendant, alleging that the action is frivolous, without 104 legal or factual merit, or brought for the purpose of 105 harassment, the court may, after hearing evidence as to the 106 necessity therefor, require the plaintiff to post bond in an 107 amount that the court finds reasonable to indemnify the 108 defendant for any damages incurred, including reasonable 109 attorney fees. This subsection does not apply to any action 110 initiated by the enforcing authority. 111 Section 2. Paragraphs (o) and (x) of subsection (1) of 112 section 626.9541, Florida Statutes, are amended to read: 113 626.9541 Unfair methods of competition and unfair or 114 deceptive acts or practices defined.— 115 (1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE 116 ACTS.—The following are defined as unfair methods of competition 117 and unfair or deceptive acts or practices: 118 (o) Illegal dealings in premiums; excess or reduced charges 119 for insurance.— 120 1. Knowingly collecting any sum as a premium or charge for 121 insurance, which is not then provided, or is not in due course 122 to be provided, subject to acceptance of the risk by the 123 insurer, by an insurance policy issued by an insurer as 124 permitted by this code. 125 2. Knowingly collecting as a premium or charge for 126 insurance any sum in excess of or less than the premium or 127 charge applicable to such insurance, in accordance with the 128 applicable classifications and rates as filed with and approved 129 by the office, and as specified in the policy; or, in cases when 130 classifications, premiums, or rates are not required by this 131 code to be so filed and approved, premiums and charges collected 132 from a Florida resident in excess of or less than those 133 specified in the policy and as fixed by the insurer. This 134 provision doesshallnotbe deemed toprohibit the charging and 135 collection, by surplus lines agents licensed under part VIII of 136 this chapter, of the amount of applicable state and federal 137 taxes, or fees as authorized by s. 626.916(4), in addition to 138 the premium required by the insurer or the charging and 139 collection, by licensed agents, of the exact amount of any 140 discount or other such fee charged by a credit card facility in 141 connection with the use of a credit card, as authorized by 142 subparagraph (q)3., in addition to the premium required by the 143 insurer. This subparagraph doesshallnotbe construed to144 prohibit collection of a premium for a universal life or a 145 variable or indeterminate value insurance policy made in 146 accordance with the terms of the contract. 147 3.a. Imposing or requesting an additional premium for a 148 policy of motor vehicle liability, personal injury protection, 149 medical payment, or collision insurance or any combination 150 thereof or refusing to renew the policy solely because the 151 insured was involved in a motor vehicle accident unless the 152 insurer’s file contains information from which the insurer in 153 good faith determines that the insured was substantially at 154 fault in the accident. 155 b. An insurer thatwhichimposes and collects such a 156 surcharge orwhichrefuses to renew such policy shall, in 157 conjunction with the notice of premium due or notice of 158 nonrenewal, notify the named insured that he or she is entitled 159 to reimbursement of such amount or renewal of the policy under 160 the conditions listed below and will subsequently reimburse him 161 or her or renew the policy, if the named insured demonstrates 162 that the operator involved in the accident was: 163 (I) Lawfully parked; 164 (II) Reimbursed by, or on behalf of, a person responsible 165 for the accident or has a judgment against such person; 166 (III) Struck in the rear by another vehicle headed in the 167 same direction and was not convicted of a moving traffic 168 violation in connection with the accident; 169 (IV) Hit by a “hit-and-run” driver, if the accident was 170 reported to the proper authorities within 24 hours after 171 discovering the accident; 172 (V) Not convicted of a moving traffic violation in 173 connection with the accident, but the operator of the other 174 automobile involved in such accident was convicted of a moving 175 traffic violation; 176 (VI) Finally adjudicated not to be liable by a court of 177 competent jurisdiction; 178 (VII) In receipt of a traffic citation which was dismissed 179 or nolle prossed; or 180 (VIII) Not at fault as evidenced by a written statement 181 from the insured establishing facts demonstrating lack of fault 182 which are not rebutted by information in the insurer’s file from 183 which the insurer in good faith determines that the insured was 184 substantially at fault. 185 c. In addition to the other provisions of this 186 subparagraph, an insurer may not fail to renew a policy if the 187 insured has had only one accident in which he or she was at 188 fault within the current 3-year period. However, an insurer may 189 nonrenew a policy for reasons other than accidents in accordance 190 with s. 627.728. This subparagraph does not prohibit nonrenewal 191 of a policy under which the insured has had three or more 192 accidents, regardless of fault, during the most recent 3-year 193 period. 194 4. Imposing or requesting an additional premium for, or 195 refusing to renew, a policy for motor vehicle insurance solely 196 because the insured committed a noncriminal traffic infraction 197 as described in s. 318.14 unless the infraction is: 198 a. A second infraction committed within an 18-month period, 199 or a third or subsequent infraction committed within a 36-month 200 period. 201 b. A violation of s. 316.183, when such violation is a 202 result of exceeding the lawful speed limit by more than 15 miles 203 per hour. 204 5. Upon the request of the insured, the insurer and 205 licensed agent shall supply to the insured the complete proof of 206 fault or other criteria thatwhichjustifies the additional 207 charge or cancellation. 208 6. AnNoinsurer may notshallimpose or request an 209 additional premium for motor vehicle insurance, cancel or refuse 210 to issue a policy, or refuse to renew a policy because the 211 insured or the applicant is a handicapped or physically disabled 212 person, so long as such handicap or physical disability does not 213 substantially impair such person’s mechanically assisted driving 214 ability. 215 7. AnNoinsurer may not cancel or otherwise terminate any 216 insurance contract or coverage, or require execution of a 217 consent to rate endorsement, during the stated policy term for 218 the purpose of offering to issue, or issuing, a similar or 219 identical contract or coverage to the same insured with the same 220 exposure at a higher premium rate or continuing an existing 221 contract or coverage with the same exposure at an increased 222 premium. 223 8. AnNoinsurer may not issue a nonrenewal notice on any 224 insurance contract or coverage, or require execution of a 225 consent to rate endorsement, for the purpose of offering to 226 issue, or issuing, a similar or identical contract or coverage 227 to the same insured at a higher premium rate or continuing an 228 existing contract or coverage at an increased premium without 229 meeting any applicable notice requirements. 230 9. AnNoinsurer may notshall, with respect to premiums 231 charged for motor vehicle insurance, unfairly discriminate 232 solely on the basis of age, sex, marital status, or scholastic 233 achievement. 234 10. An insurer may not use any rate, rating schedule, 235 rating manual, or underwriting rule that is not contained in a 236 rating manual and that is determined in whole or in part on the 237 basis of an insured’s credit report or credit score as defined 238 in s. 626.9741. 239 11.10.Imposing or requesting an additional premium for 240 motor vehicle comprehensive or uninsured motorist coverage 241 solely because the insured was involved in a motor vehicle 242 accident or was convicted of a moving traffic violation. 243 12.11.AnNoinsurer may notshallcancel or issue a 244 nonrenewal notice on any insurance policy or contract without 245 complying with any applicable cancellation or nonrenewal 246 provision required under the Florida Insurance Code. 247 13.12.AnNoinsurer may notshallimpose or request an 248 additional premium, cancel a policy, or issue a nonrenewal 249 notice on any insurance policy or contract because of any 250 traffic infraction when adjudication has been withheld and no 251 points have been assessed pursuant to s. 318.14(9) and (10). 252 However, this subparagraph does not apply to traffic infractions 253 involving accidents in which the insurer has incurred a loss due 254 to the fault of the insured. 255 (x) Refusal to insure.—In addition to other provisions of 256 this code, the refusal to insure, or continue to insure, any 257 individual or risk solely because of: 258 1. Race, color, creed, marital status, sex, or national 259 origin; 260 2. The residence, age, or lawful occupation of the 261 individual or the location of the risk, unless there is a 262 reasonable relationship between the residence, age, or lawful 263 occupation of the individual or the location of the risk and the 264 coverage issued or to be issued; 265 3. The insured’s or applicant’s failure to agree to place 266 collateral business with any insurer, unless the coverage 267 applied for would provide liability coverage which is excess 268 over that provided in policies maintained on property or motor 269 vehicles; 270 4. The insured’s or applicant’s failure to purchase 271 noninsurance services or commodities, including automobile 272 services as defined in s. 624.124; 273 5. The fact that the insured or applicant is a public 274 official;or275 6. The fact that the insured or applicant had been 276 previously refused insurance coverage by any insurer, when such 277 refusal to insure or continue to insure for this reason occurs 278 with such frequency as to indicate a general business practice; 279 or.280 7. The insured’s or applicant’s credit report or credit 281 score as defined in s. 626.9741. 282 Section 3. Section 626.9741, Florida Statutes, is amended 283 to read: 284 626.9741 Use of credit reports and credit scores by 285 insurers.— 286 (1) An insurer may not use credit reports or credit scores 287 in making rating determinations.The purpose of this section is288to regulate and limit the use of credit reports and credit289scores by insurers for underwriting and rating purposes. This290section applies only to personal lines motor vehicle insurance291and personal lines residential insurance, which includes292homeowners, mobile home owners’ dwelling, tenants, condominium293unit owners, cooperative unit owners, and similar types of294insurance.295 (2) As used in this section, the term: 296(a) “Adverse decision” means a decision to refuse to issue297or renew a policy of insurance; to issue a policy with298exclusions or restrictions; to increase the rates or premium299charged for a policy of insurance; to place an insured or300applicant in a rating tier that does not have the lowest301available rates for which that insured or applicant is otherwise302eligible; or to place an applicant or insured with a company303operating under common management, control, or ownership which304does not offer the lowest rates available, within the affiliate305group of insurance companies, for which that insured or306applicant is otherwise eligible.307 (a)(b)“Credit report” means any written, oral, or other 308 communication of any information by a consumer reporting agency, 309 as defined in the federal Fair Credit Reporting Act, 15 U.S.C. 310 ss. 1681 et seq., bearing on a consumer’s credit worthiness, 311 credit standing, or credit capacity, which is used or expected 312 to be used or collected as a factor to establish a person’s 313 eligibility for credit or insurance, or any other purpose 314 authorized pursuant to the applicable provision of such federal 315 act. A credit score alone, as calculated by a credit reporting 316 agency or by or for the insurer, may not be considered a credit 317 report. 318 (b)(c)“Credit score” means a score, grade, or value that 319 is derived by using any or all data from a credit report in any 320 type of model, method, or program, whether electronically, in an 321 algorithm, computer software or program, or any other process, 322 for the purpose of grading or ranking credit report data. 323(d) “Tier” means a category within a single insurer into324which insureds with substantially similar risk, exposure, or325expense factors are placed for purposes of determining rate or326premium.327(3) An insurer must inform an applicant or insured, in the328same medium as the application is taken, that a credit report or329score is being requested for underwriting or rating purposes. An330insurer that makes an adverse decision based, in whole or in331part, upon a credit report must provide at no charge, a copy of332the credit report to the applicant or insured or provide the333applicant or insured with the name, address, and telephone334number of the consumer reporting agency from which the insured335or applicant may obtain the credit report. The insurer must336provide notification to the consumer explaining the reasons for337the adverse decision. The reasons must be provided in338sufficiently clear and specific language so that a person can339identify the basis for the insurer’s adverse decision. Such340notification shall include a description of the four primary341reasons, or such fewer number as existed, which were the primary342influences of the adverse decision. The use of generalized terms343such as “poor credit history,” “poor credit rating,” or “poor344insurance score” does not meet the explanation requirements of345this subsection. A credit score may not be used in underwriting346or rating insurance unless the scoring process produces347information in sufficient detail to permit compliance with the348requirements of this subsection. It shall not be deemed an349adverse decision if, due to the insured’s credit report or350credit score, the insured continues to receive a less favorable351rate or placement in a less favorable tier or company at the352time of renewal except for renewals or reunderwriting required353by this section.354(4)(a) An insurer may not request a credit report or score355based upon the race, color, religion, marital status, age,356gender, income, national origin, or place of residence of the357applicant or insured.358(b) An insurer may not make an adverse decision solely359because of information contained in a credit report or score360without consideration of any other underwriting or rating361factor.362(c) An insurer may not make an adverse decision or use a363credit score that could lead to such a decision if based, in364whole or in part, on:3651. The absence of, or an insufficient, credit history, in366which instance the insurer shall:367a. Treat the consumer as otherwise approved by the Office368of Insurance Regulation if the insurer presents information that369such an absence or inability is related to the risk for the370insurer;371b. Treat the consumer as if the applicant or insured had372neutral credit information, as defined by the insurer;373c. Exclude the use of credit information as a factor and374use only other underwriting criteria;3752. Collection accounts with a medical industry code, if so376identified on the consumer’s credit report;3773. Place of residence; or3784. Any other circumstance that the Financial Services379Commission determines, by rule, lacks sufficient statistical380correlation and actuarial justification as a predictor of381insurance risk.382(d) An insurer may use the number of credit inquiries383requested or made regarding the applicant or insured except for:3841. Credit inquiries not initiated by the consumer or385inquiries requested by the consumer for his or her own credit386information.3872. Inquiries relating to insurance coverage, if so388identified on a consumer’s credit report.3893. Collection accounts with a medical industry code, if so390identified on the consumer’s credit report.3914. Multiple lender inquiries, if coded by the consumer392reporting agency on the consumer’s credit report as being from393the home mortgage industry and made within 30 days of one394another, unless only one inquiry is considered.3955. Multiple lender inquiries, if coded by the consumer396reporting agency on the consumer’s credit report as being from397the automobile lending industry and made within 30 days of one398another, unless only one inquiry is considered.399(e) An insurer must, upon the request of an applicant or400insured, provide a means of appeal for an applicant or insured401whose credit report or credit score is unduly influenced by a402dissolution of marriage, the death of a spouse, or temporary403loss of employment. The insurer must complete its review within40410 business days after the request by the applicant or insured405and receipt of reasonable documentation requested by the406insurer, and, if the insurer determines that the credit report407or credit score was unduly influenced by any of such factors,408the insurer shall treat the applicant or insured as if the409applicant or insured had neutral credit information or shall410exclude the credit information, as defined by the insurer,411whichever is more favorable to the applicant or insured. An412insurer shall not be considered out of compliance with its413underwriting rules or rates or forms filed with the Office of414Insurance Regulation or out of compliance with any other state415law or rule as a result of granting any exceptions pursuant to416this subsection.417(5) A rate filing that uses credit reports or credit scores418must comply with the requirements of s.627.062or s.627.0651419to ensure that rates are not excessive, inadequate, or unfairly420discriminatory.421(6) An insurer that requests or uses credit reports and422credit scoring in its underwriting and rating methods shall423maintain and adhere to established written procedures that424reflect the restrictions set forth in the federal Fair Credit425Reporting Act, this section, and all rules related thereto.426(7)(a) An insurer shall establish procedures to review the427credit history of an insured who was adversely affected by the428use of the insured’s credit history at the initial rating of the429policy, or at a subsequent renewal thereof. This review must be430performed at a minimum of once every 2 years or at the request431of the insured, whichever is sooner, and the insurer shall432adjust the premium of the insured to reflect any improvement in433the credit history. The procedures must provide that, with434respect to existing policyholders, the review of a credit report435will not be used by the insurer to cancel, refuse to renew, or436require a change in the method of payment or payment plan.437(b) However, as an alternative to the requirements of438paragraph (a), an insurer that used a credit report or credit439score for an insured upon inception of a policy, who will not440use a credit report or score for reunderwriting, shall441reevaluate the insured within the first 3 years after inception,442based on other allowable underwriting or rating factors,443excluding credit information if the insurer does not increase444the rates or premium charged to the insured based on the445exclusion of credit reports or credit scores.446 (3)(8)The commission may adopt rules to administer this 447 section.The rules may include, but need not be limited to:448(a) Information that must be included in filings to449demonstrate compliance with subsection (3).450(b) Statistical detail that insurers using credit reports451or scores under subsection (5) must retain and report annually452to the Office of Insurance Regulation.453(c) Standards that ensure that rates or premiums associated454with the use of a credit report or score are not unfairly455discriminatory, based upon race, color, religion, marital456status, age, gender, income, national origin, or place of457residence.458(d) Standards for review of models, methods, programs, or459any other process by which to grade or rank credit report data460and which may produce credit scores in order to ensure that the461insurer demonstrates that such grading, ranking, or scoring is462valid in predicting insurance risk of an applicant or insured.463 Section 4. This act shall take effect July 1, 2012.