I 

108TH CONGRESS 

1ST SESSION H. R. 1473

To amend the Fair Credit Reporting Act to provide disclosures of creditbased insurance scoring information by insurers and credit reporting 

agencies, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 27, 2003

Mr. GUTIERREZ introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL

To amend the Fair Credit Reporting Act to provide disclosures of credit-based insurance scoring information by 

insurers and credit reporting agencies, and for other 

purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Insurance Credit Score 

5 Disclosure and Reporting Act’’. 

6 SEC. 2. FINDINGS AND PURPOSES. 

7 (a) FINDINGS.—The Congress finds as follows: 
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1 (1) According to the Insurance Information In2 stitute, 90 percent of property insurers now use in3 surance credit scoring in some way in their under4 writing decisions. 

5 (2) According to Consumer Reports, 70 percent 

6 of consumer reports have some kind of error and 29 

7 percent have at least 1 major error. 

8 (3) Since insurance credit scores are based on 

9 credit bureau data, the accuracy of the data is es10 sential to achieving accurate scores. 

11 (4) No insurance credit scoring modeling com12 pany has been able to identify the exact relationship 

13 between credit characteristics and loss ratios. 

14 (5) In January 2002, the Florida Task Force 

15 on the Use of Credit Reports in Underwriting Auto16 mobile and Homeowners Insurance concluded that 

17 the use of consumer reports has a negative impact 

18 on young people, minorities and people with low in19 comes. 

20 (6) The Fair Credit Reporting Act requires that 

21 insurers disclose the specific credit criteria used to 

22 raise rates or to render a consumer ineligible for a 

23 discounted premium. 

24 (7) Corporate research conducted by Fair, Isaac 

25 & Company found that residents of ZIP codes with 
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1 high minority populations scored substantially lower 

2 than residents than residents of other ZIP codes. 

3 (b) PURPOSES.—The purposes of this Act are as fol4 lows: 

5 (1) To protect insurance applicants and policy6 holders from insurers taking adverse action regard7 ing insurance coverage and premiums based solely 

8 on credit history or insurance credit score. 

9 (2) To require insurers to disclose the use of in10 surance credit scoring to insurance applicants and 

11 policyholders prior to original application and to dis12 close the insurance credit scoring criteria used by in13 surers to assess risk of applicant. 

14 (3) To enhance the availability and affordability 

15 of insurance products and services to individuals and 

16 small businesses of all economic circumstances and 

17 in all geographic areas. 

18 (4) To facilitate the enforcement of Federal and 

19 State laws that prohibit illegally discriminatory in20 surance practices. 

21 SEC. 3. ESTABLISHMENT OF GENERAL REQUIREMENTS. 

22 (a) DISCLOSURE OF USE OF INSURANCE CREDIT

23 SCORE AND CONSUMER REPORT.—An insurer who uses, 

24 or may use, a consumer report or insurance credit score 

25 as a factor in underwriting an insurance application or 
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1 policy in a designated line of insurance shall disclose to 

2 the applicant for such insurance, including a person re3 newing an existing policy of insurance, at the time of the 

4 original application for the policy or the renewal of the 

5 policy that—

6 (1) the insurer will, or will not, gather credit in7 formation, as the case may be; and 

8 (2) the cost, coverage, and availability of insur9 ance policy will, or will not, be affected by the con10 sumer report or the insurance credit score of the ap11 plicant, as the case may be. 

12 (b) INFORMATION CONCERNING USE OF CONSUMER

13 REPORTS AND INSURANCE CREDIT SCORES.—An insurer 

14 who uses, or may use, a consumer report or insurance 

15 credit score as a factor in underwriting an insurance appli16 cation for, or the renewal of, an insurance policy for a 

17 designated line of insurance shall provide to the applicant 

18 or policyholder all relevant information on the use of such 

19 report or scores and the relationship between the use of 

20 insurance credit scores or any other risk scores or predic21 tors and the cost and the scope of the coverage of such 

22 insurance to the applicant or policy holder, including the 

23 following: 

24 (1) A clear, concise, and detailed summary of 

25 how the scores and predictors are derived. 
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1 (2) All factors taken into account in deriving a 

2 score or predictor. 

3 (3) How such factors are applied to the appli4 cant or policyholder. 

5 (4) How the applicant or policyholder scored on 

6 all factors. 

7 (5) The relative weight given to each factor. 

8 (6) The manner and extent to which such fac9 tors raise or lower the score or predictor. 

10 (c) PROHIBITION ON USE OF ADVERSE INFORMA11 TION IN DISPUTE.—

12 (1) IN GENERAL.—An insurer may not take any 

13 type of adverse action with respect to any applica14 tion for, or renewal of, an insurance policy in a des15 ignated line of insurance that takes into account an 

16 insurance credit score or credit information con17 tained in a consumer report that the insurer knows 

18 to be in dispute. 

19 (2) DISCLOSURE OF MAXIMUM POSSIBLE AND

20 ACTUAL INSURANCE CREDIT SCORE.—Additionally, 

21 for each industry trade line total, an insurer shall 

22 disclose to the applicant or policy holder—

23 (A) the highest insurance credit score that 

24 it is possible to achieve for each such line; and 
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1 (B) the actual insurance credit score deter2 mined for the applicant or policy holder for 

3 such line pursuant to the insurance credit scor4 ing model. 

5 (3) REDETERMINATION OF UNDERWRITING

6 FOLLOWING CORRECTION OF CONSUMER REPORT.—

7 If an insurer has taken adverse action with respect 

8 to any insurance policy in a designated line of insur9 ance based on inaccurate information contained in a 

10 consumer report or utilized in computing an insur11 ance credit score, and that inaccurate information is 

12 subsequently corrected, the insurer shall re-under13 write the impacted policy and refund any premium 

14 decrease to the insured retroactive to the inception 

15 date of the policy. 

16 (d) PROHIBITION ON USE OF LOW INSURANCE

17 CREDIT SCORES RESULTING FROM MEDICAL EMER18 GENCIES OR OTHER SPECIAL CIRCUMSTANCES.—An in19 surer may not make an adverse inference in underwriting 

20 an insurance application or policy in a designated line of 

21 insurance based on a low insurance credit score as a result 

22 of little or no credit information, unusually high bills asso23 ciated with medical emergencies, or other special cir24 cumstances. 
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1 (e) ACTIONS REQUIRED IN CASE OF ADVERSE AC2 TION BASED ON CONSUMER REPORT OR INSURANCE

3 CREDIT SCORES.—If the use of a consumer report or in4 surance credit score in underwriting an insurance applica5 tion or policy in a designated line of insurance results in 

6 an adverse action to an applicant or policyholder, the in7 surer shall—

8 (1) inform the applicant or policyholder that a 

9 consumer report or insurance credit score adversely 

10 affected the underwriting of the insurance applica11 tion or policy; 

12 (2) provide the applicant or policyholder with a 

13 copy of the consumer report used by the insurer on 

14 which the action was based, together with a detailed 

15 explanation, in easy to understand terminology, of—

16 (A) the specific detailed credit characteris17 tics on which the adverse action was based; and 

18 (B) the specific actions the applicant or 

19 policyholder can take to improve the insurance 

20 credit score; 

21 (3) ensure that the consumer report provided to 

22 applicant or policy holder has the name, address, 

23 and a toll-free telephone number of the consumer re24 porting agency that furnished the credit information; 
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1 (4) inform the applicant or policyholder of his 

2 or her right to verify any credit information with 

3 that consumer reporting agency (and include the 

4 names of any other consumer reporting agencies 

5 which provided information in the consumer report 

6 used by the insurer and provide the applicant or pol7 icyholder with the addresses and toll-free telephone 

8 numbers of such other consumer reporting agencies); 

9 and 

10 (5) inform the applicant or policyholder of his 

11 or her right to lodge a dispute with a consumer re12 porting agency in order to have any erroneous or in13 complete information corrected in accordance with 

14 the Fair Credit Reporting Act. 

15 (f) PREMIUM PAYMENT PLAN REQUIREMENTS.—

16 (1) BASED ON INSURANCE PAYMENT HIS17 TORY.—An insurer that offers premium payment 

18 plans to applicants and policyholders in a designated 

19 line of insurance may not deny or condition such 

20 payment plans on anything other than the payment 

21 history of such applicant or policyholder with that 

22 insurance company. 

23 (2) EVENHANDED REPORTING OF PAYMENT

24 HISTORY.—An insurer that offers premium payment 

25 plans to applicants and policy holders in a des-
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1 ignated line of insurance shall report both the favor2 able and unfavorable payment history of the insured 

3 to a nationally recognized consumer reporting agen4 cy at least monthly, quarterly, semi-annually, or an5 nually pursuant to policy requirements. 

6 (3) RECORDKEEPING REQUIREMENT.—An in7 surer shall compile and maintain, in accordance with 

8 regulations, a record of the information provided by 

9 applicant or policyholder with respect to a des10 ignated line of insurance, together with the credit 

11 history or consumer report obtained by insurer and 

12 used in underwriting. 

13 (4) INSURANCE CREDIT SCORERS.—

14 (A) IN GENERAL.—Any person involved in 

15 creating, compiling, or providing insurance 

16 credit scores to or on behalf of an insurer relat17 ing to a designated line of insurance shall not 

18 provide or sell to any party, other than the in19 surer, information or mailing lists that include 

20 an insurance credit score or any other informa21 tion that, in whole or in part, is generated or 

22 derived from credit inquiries or consumer re23 ports of insured persons or insurance appli24 cants. 
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1 (B) SCOPE OF APPLICATION.—The infor2 mation to which subparagraph (A) applies in3 cludes information that may identify time peri4 ods during which an insurance policy of the ap5 plicant or insured in a designated line of insur6 ance may expire or an estimated range within 

7 which the credit score of a person may fall. 

8 (C) CERTAIN INFORMATION NOT SUBJECT

9 TO THIS PARAGRAPH.—This paragraph shall 

10 not be construed as limiting or prohibiting the 

11 exchange of information that is specifically au12 thorized under the Fair Credit Reporting Act or 

13 this Act. 

14 SEC. 4. ESTABLISHMENT OF GENERAL REQUIREMENTS TO 

15 SUBMIT INSURANCE CREDIT SCORING MOD16 ELS AND INSURANCE CREDIT SCORES USED 

17 BY INSURERS IN UNDERWRITING. 

18 The Federal Trade Commission shall, by regulation, 

19 establish requirements for insurers to compile and submit 

20 insurance credit score information with respect to des21 ignated lines of insurance to the Commission for each an22 nual reporting period, in accordance with this Act.
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1 SEC. 5. REPORT ON RELATIONSHIP BETWEEN CREDIT AND 

2 INSURANCE CREDIT SCORES AND THE RACE, 

3 INCOME, GEOGRAPHIC LOCATION AND AGE 

4 OF INSURANCE APPLICANTS AND POLICY5 HOLDERS. 

6 (a) STUDY REQUIRED.—The Federal Trade Commis7 sion shall conduct a comprehensive investigation of the re8 lationship between use by insurers of credit information 

9 and insurance credit scores, with respect to designated 

10 lines of insurance, and risk factor of loss, including the 

11 impact by race, income, geographic location and age. 

12 (b) REPORT REQUIRED.—Before the end of the 15-

13 month period beginning on the date of the enactment of 

14 this Act, the Commission shall submit a report to the Con15 gress of the findings and conclusions of the Commission 

16 with regard to the study under subsection (a), together 

17 with such recommendations for legislative or administra18 tive action as the Commission may determine to be appro19 priate. 

20 SEC. 6. DESIGNATIONS. 

21 (a) DESIGNATION OF LINES OF INSURANCE.—

22 (1) IN GENERAL.—For purposes of this Act, 

23 the Commission shall, by regulation, designate lines 

24 of insurance as designated lines of insurance as fol25 lows: 
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1 (A) AUTOMOBILE.—The Commission shall 

2 designate private passenger automobile insur3 ance and shall also designate any sublines and 

4 coverage types of private passenger automobile 

5 insurance that the Commission considers appro6 priate, after comparing the availability, afford7 ability, and type of coverage in such lines by ge8 ographic area. 

9 (B) NONCOMMERCIAL INSURANCE FOR

10 RESIDENTIAL PROPERTY.—

11 (i) IN GENERAL.—The Commission 

12 shall designate homeowners insurance, in13 cluding mobile homeowners, manufactured 

14 homeowners, condominium owners, and 

15 renters’ coverage, dwelling fire and allied 

16 lines, earthquake coverage for a residence 

17 or personal property, personal liability and 

18 theft coverage, mechanical breakdown cov19 erage for personal auto or home appli20 ances, and shall distinguish the coverage 

21 types in such lines by the perils covered 

22 and by market or replacement value. 

23 (ii) NATURE OF OFFERING.—With re24 spect to lines of insurance designated 

25 under clause (i), the Commission shall also 
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1 require insurers to inform the Commission 

2 as to whether the insurance is offered vol3 untarily or in conjunction with a residual 

4 market mechanism. 

5 (C) SMALL BUSINESS.—The Commission 

6 shall designate as designated lines of insurance 

7 any lines of small business insurance, and any 

8 sublines and coverage types of small business 

9 insurance, that the Commission determines to 

10 be appropriate after comparing the availability, 

11 affordability, and type of coverage in such lines 

12 by geographic area. 

13 (2) REPORT ON NONDESIGNATED LINES.—At 

14 any time the Commission determines that any line 

15 of insurance not described in paragraph (1) should 

16 be a designated line because disparities in coverage 

17 provided under such line exist among geographic 

18 areas having different income levels or racial com19 position, the Commission shall submit a report rec20 ommending designating such line of insurance as a 

21 designated line for purposes of this Act to the Com22 mittee on Financial Services of the House of Rep23 resentatives and to the Senate. 

24 (b) DURATION OF DESIGNATION.—
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1 (1) IN GENERAL.—Except as provided in para2 graph (2), the Commission shall make the designa3 tions under this section once every 5 years, by regu4 lation. 

5 (2) ALTERATION OF DESIGNATION.—During 

6 any 5-year period referred to in paragraph (1) in 

7 which designations are in effect, the Commission 

8 may amend or revise the designated lines, sublines, 

9 and coverage types only by regulation and only in 

10 accordance with the requirements of this section. 

11 (c) NOTICE OF DESIGNATIONS.—Before the end of 

12 the 90-day period beginning on the date a designation of 

13 a line of insurance is made under this section, the Com14 mission shall notify any person who has an interest in or 

15 is affected by such designation of the designation. 

16 (d) OBTAINING INFORMATION.—The Commission 

17 may require insurers to submit to the Commission such 

18 information as the Commission considers necessary to 

19 make designations specifically required under this Act. 

20 SEC. 7. ENFORCEMENT. 

21 (a) CIVIL PENALTIES.—Any insurer who is deter22 mined by the Commission, after providing opportunity for 

23 a hearing on the record, to have violated any requirement 

24 of this Act or any regulation prescribed under this Act 
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1 shall be subject to a civil penalty of not to exceed $5,000 

2 for each day during which such violation continues. 

3 (b) INJUNCTION.—The Commission may bring an ac4 tion in an appropriate United States district court for ap5 propriate declaratory and injunctive relief against any in6 surer who violates the requirements of this Act. 

7 (c) INSURER LIABILITY.—An insurer shall be respon8 sible under this section for any violation of a statistical 

9 agent acting on behalf of the insurer. 

10 SEC. 8. RELATION TO OTHER LAWS. 

11 (a) STATE LAW.—No provision of this Act shall be 

12 construed as annulling, altering, or affecting the laws of 

13 any State or any political subdivision of a State relating 

14 to public disclosure, submission of information, and record 

15 keeping or exempting any insurer subject to this Act from 

16 any obligation under, or an obligation to comply with, any 

17 such law. 

18 (b) OTHER FEDERAL LAW.—This Act relates specifi19 cally to the business of insurance. 

20 SEC. 9. REGULATIONS. 

21 (a) IN GENERAL.—The Commission shall prescribe, 

22 after notice and opportunity for comment, such regula23 tions as may be necessary to carry out this Act and pre24 vent evasions of this Act and such regulations.
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1 (b) FACTORS TO BE CONSIDERED.—In prescribing 

2 regulations under this Act, the Commission shall take into 

3 consideration the administrative, paperwork, and other 

4 burdens on insurance agents, including independent insur5 ance agents, involved in complying with the requirements 

6 of this Act and shall minimize the burdens imposed by 

7 such requirements with respect to such agents. 

8 SEC. 10. DEFINITIONS. 

9 For purposes of this Act, the following definitions 

10 shall apply: 

11 (1) ADVERSE ACTION.—The term ‘‘adverse ac12 tion’’—

13 (A) means a denial or cancellation of, an 

14 increase in any charge for, or a reduction or 

15 other adverse or unfavorable change in the 

16 terms of coverage or amount of, any insurance, 

17 existing or applied for, in connection with the 

18 underwriting of insurance; and 

19 (B) includes the nonrenewal of an existing 

20 insurance policy. 

21 (2) COMMISSION.—The term ‘‘Commission’’ 

22 means the Federal Trade Commission.

23 (3) CONSUMER REPORTING AGENCY.—The term 

24 ‘‘consumer reporting agency’’ has the same meaning 
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1 as in section 603(f) of the Fair Credit Reporting 

2 Act. 

3 (4) CONSUMER REPORT.—The term ‘‘consumer 

4 report’’—

5 (A) when used in connection with insur6 ance issued primarily for personal, family, or 

7 household purposes, has the same meaning as 

8 in section 603(d) of the Fair Credit Reporting 

9 Act; and 

10 (B) when used in connection with small 

11 business insurance, has the meaning given such 

12 term by the Commission in regulations. 

13 (5) INSURANCE APPLICATION.—The term ‘‘in14 surance application’’ means an application for insur15 ance, as determined by the Commission, made by 

16 any means, including in writing, orally, and by elec17 tronic means. 

18 (6) INSURANCE CREDIT SCORE.—The term ‘‘in19 surance credit score’’ means a numerical representa20 tion of the insurance risk a person presents using 

21 the person’s attributes derived from a consumer re22 port or credit information in a formula to assess in23 surance risk on an actuarial or statistical basis. 
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1 (7) INSURANCE POLICY.—The term ‘‘insurance 

2 policy’’ means a policy, contract, or certificate or evi3 dence of insurance. 

4 (8) INSURER.—The term ‘‘insurer’’—

5 (A) means any corporation, association, so6 ciety, order, firm, company, mutual, partner7 ship, individual, aggregation of individuals, or 

8 any other legal entity that is authorized to 

9 transact the business of property or casualty in10 surance in any State or that is engaged in a 

11 property or casualty insurance business; and 

12 (B) does not include an individual or entity 

13 which represents an insurer as agent solely for 

14 the purpose of selling or which represents a 

15 consumer as a broker solely for the purpose of 

16 buying insurance. 

17 (9) RESIDUAL MARKET MECHANISM.—The term 

18 ‘‘residual market mechanism’’ means any assigned 

19 risk plan, private insurance placement facility, joint 

20 underwriting association, or similar mechanism es21 tablished by a State or pursuant to any State law 

22 to provide property and casualty insurance for prop23 erty owners who are unable to obtain such coverage 

24 in the voluntary market. Such term includes each 

25 State-wide plan of any State to assure fair access to 
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1 insurance requirements under part A of title XII of 

2 the National Housing Act. 

3 (10) SMALL BUSINESS.—The term ‘‘small busi4 ness’’ means any business that meets the criteria es5 tablished under and pursuant to section 3 of the 

6 Small Business Act for a small-business concern. 

7 (11) SMALL BUSINESS INSURANCE.—The term 

8 ‘‘small business insurance’’—

9 (A) means property and casualty insurance 

10 specifically covering loss of, or damage to, the 

11 small business property, including insurance 

12 against loss of income or extra expense incurred 

13 because of loss of, or damage to, property, and 

14 insurance against third party liability claims 

15 caused by negligence or imposed by statute or 

16 contract; and 

17 (B) does not include workers’ compensa18 tion, professional liability, or title insurance. 

19 (12) UNDERWRITING.—The term ‘‘under20 writing’’ means the selection of the risk that will be 

21 assumed by the insurer on a contract, and specifi22 cally the decision whether to accept, deny, renew, 

23 not renew, reduce, or increase the amount of bene24 fits payable or types of coverages under the contract. 
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1 SEC. 11. EFFECTIVE DATE OF REGULATIONS. 

2 Except as otherwise provided in this Act, regulations 

3 necessary to implement the requirements of this Act, and 

4 prevent evasions of the Act and regulations prescribed 

5 under this Act, shall be prescribed in final form before 

6 the end of the 18-month period beginning on the date of 

7 the enactment of this Act.

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