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104TH CONGRESS

1ST SESSION H. R. 182

To provide for disclosures for insurance in interstate commerce.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 4, 1995

Mrs. COLLINS introduced the following bill; which was referred to the

Committee on Commerce

A BILL

To provide for disclosures for insurance in interstate

commerce.

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 ‘‘Anti Redlining in

5 Insurance Disclosure Act’’.

6 SEC. 2. FINDINGS AND CONSTRUCTION.

7 (a) FINDINGS.—The Congress finds that—

8 (1) there are disparities in property and cas9 ualty insurance coverage provided by some insurers

10 engaged in interstate commerce between areas of

11 different incomes and racial composition,
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1 (2) such disparities adversely affect insurance

2 in interstate commerce and the affordability and

3 availability of insurance for consumers, and

4 (3) disclosures of insurance activities of insur5 ers would benefit consumers and insurance regu6 lators without imposing any undue burden on

7 insurers.

8 (b) CONSTRUCTION.—Nothing in this Act is intended

9 to, nor shall it be construed to, encourage unsound under10 writing practices.

11 SEC. 3. MAINTENANCE OF INFORMATION AND PUBLIC DIS12 CLOSURE.

13 (a) GENERAL RULE.—

14 (1) DESIGNATED INSURERS.—Except as pro15 vided by subsection (b)(5), each insurer designated

16 by the Secretary, which sells a line of insurance des17 ignated by the Secretary in a Metropolitan Statis18 tical Area or Consolidated Metropolitan Statistical

19 Area, as designated by the Secretary (both hereafter

20 in this Act referred to as a ‘‘MSA’’), shall compile

21 and make available for each calendar year to the

22 Secretary in accordance with subsection (d) and reg23 ulations of the Secretary and to the public for in24 spection and copying at the home office or at a

25 central depository established under subsection (c)
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1 and at least one branch office (if there is one) within

2 such designated MSA—

3 (A) the number and total coverage amount

4 of insurance policies by line designated by the

5 Secretary which were issued or for which the in6 surer received a completed application in such

7 designated MSA, and

8 (B) the number of agents of such insurer

9 whose principal place of business is located in

10 such designated MSA and the number within

11 each census tract or county, as applicable, in

12 such designated MSA and with respect to each

13 such agent, whether such agent is an employee,

14 independent contractor working exclusively for

15 such insurer, or an independent contractor

16 appointed to represent such insurer on a non17 exclusive basis.

18 (2) NON-DESIGNATED INSURERS.—Except as

19 provided in subsection (b)(5), every insurer which

20 sells an insurance policy in a designated line of in21 surance in a designated MSA and which is not a

22 designated insurer in such MSA shall report for

23 each calendar year to the Secretary in accordance

24 with subsection (d) and regulations of the Secretary

25 the number of insurance policies in a designated line
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1 sold in such MSA on an annualized basis which ad2 justs for varying durations of insurance policies

3 sold—

4 (A) itemized by census tract for policies

5 sold within any county with a population of

6 more than 30,000 within the designated MSA,

7 or

8 (B) by county for insurance policies sold

9 within any other county in such MSA.

10 Such information shall be made available to the pub11 lic on a timetable determined by the Secretary but

12 not later than December 31 of the calendar year fol13 lowing the calendar year for which the information

14 is required to be reported.

15 (b) REQUIREMENTS.—

16 (1) CONTENT.—The information required to be

17 maintained and made available under subsection

18 (a)(1) shall—

19 (A) be itemized in order to clearly and con20 spicuously disclose the number and coverage

21 amount for each line of insurance for which

22 information is required by—

23 (i) census tracts for insurance policies

24 within any county with a population of
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1 more than 30,000 within the designated

2 MSA, or

3 (ii) county for insurance policies with4 in any other county within such designated

5 MSA,

6 (B) disclose for each designated line of in7 surance in a designated MSA and, with respect

8 to each such line, for each census tract or

9 county, as applicable, in the designated MSA—

10 (i) the total number of claims made

11 which with respect to property insurance

12 shall be disaggregated by the type and use

13 of the property insured, and

14 (ii) the total amount paid in claims

15 which with respect to property insurance

16 shall be disaggregated by the type and use

17 of the property insured,

18 (C) disclose the standards and criteria

19 used in underwriting each designated line of

20 insurance, and

21 (D) be made available to the public on a

22 timetable determined by the Secretary but not

23 later than December 31 of the calendar year

24 following the calendar year for which the infor25 mation is required to be made available.
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1 (2) ITEMIZATION OF DATA.—With respect to in2 surance for which information is required to be

3 maintained and made available under subsection

4 (a)(1), the following information shall be maintained

5 and made available for each completed application

6 and for each policy:

7 (A) The designated MSA for which such

8 insurance is issued and within such MSA the

9 census tract or county, as applicable, for which

10 such insurance is issued.

11 (B) The designated insurer who issued

12 such insurance.

13 (C) The date of the issuance of such insur14 ance.

15 (D) The line of the insurance which is des16 ignated and any subline or class of such insur17 ance.

18 (E) The type of insurance or policy form

19 for which applications are made and the types

20 of insurance and policy forms which are issued.

21 (F) The amount of coverage provided

22 under such insurance and any applicable

23 deductibles.

24 (G) The amount of the premiums for such

25 insurance.
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1 (H) The durations of such insurance.

2 (I) A notation if such insurance was issued

3 in a voluntary or residual market.

4 (J) The reason for any declination, can5 cellation, or non-renewal made for such insur6 ance.

7 (K) With respect to property insurance,

8 the market value of the property insured and

9 the type and use of property insured.

10 (3) PERIOD OF MAINTENANCE.—Any informa11 tion required to be compiled and made available

12 under subsection (a) shall be maintained and made

13 available for a period of 5 years after the close of

14 the first year during which such information is

15 required to be maintained and made available.

16 (4) FORMAT FOR DISCLOSURES.—Subject to

17 subsection (c), the Secretary shall prescribe a stand18 ard format for making information available as re19 quired by subsection (a). Such format shall encour20 age the submission of information in a form read21 able by a computer.

22 (5) EXEMPTION.—

23 (A) SECRETARIAL ACTION.—The Secretary

24 may by regulation exempt from the require25 ments of subsection (a) any insurer within any
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1 State if the Secretary determines that under

2 the laws of such State that such insurer is sub3 ject to disclosure requirements on a census

4 tract basis substantially similar to those of sub5 section (a) and that such law contains adequate

6 provisions for enforcement.

7 (B) UNITED STATES PROGRAM.—Report8 ing shall not be required under subsection (a)

9 with respect to insurance provided by a

10 program underwritten or administered by the

11 United States.

12 (6) COMPLETED APPLICATION.—For purposes

13 of subsection (a) and this subsection, the Secretary

14 shall define ‘‘completed applications’’ to—

15 (A) ensure that the disclosure required by

16 such subsections appropriately reflects the char17 acteristics of the applicants interested in pur18 chasing insurance in a designated MSA, and

19 (B) prevent insurers from evading the in20 tent of such subsections through practices de21 signed to discourage applicants from completing

22 applications.

23 (c) ACCESS SYSTEM.—The Secretary, shall imple24 ment a system to facilitate access to information required

25 to be maintained and made available under subsection (a).
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1 Such system shall include arrangements for a central de2 pository of information in each designated MSA and for

3 a telephone number which can be used by the public, at

4 cost, to request such information. Statements shall be

5 made available to the public for inspection and copying

6 at such central depository of information for all designated

7 insurers within such MSA.

8 (d) SUBMISSION TO SECRETARY.—The information

9 referred to in subsection (a) shall be submitted to the Sec10 retary. The Secretary shall develop regulations prescrib11 ing—

12 (1) the format for making such information

13 available,

14 (2) the method for submission of such informa15 tion, and

16 (3) the procedures for making the information

17 available to the public.

18 Any reporting insurer may submit in writing to the Sec19 retary such additional data or explanations as it deems

20 relevant to the decision by such insurer to sell insurance.

21 SEC. 4. DESIGNATIONS.

22 (a) DESIGNATIONS BY THE SECRETARY.—

23 (1) DESIGNATIONS OF MSA’S.—The Secretary

24 shall, on an annual basis, designate the MSA’s for

25 which reporting is required under section 3. At a
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1 minimum, the Secretary shall designate the 150

2 MSA’s having the largest population. The Secretary

3 may designate additional MSA’s on the basis of such

4 criteria as the Secretary may by rule develop. Such

5 a rule shall be issued in accordance with section 553

6 of title 5, United States Code.

7 (2) DESIGNATION OF INSURERS.—For each

8 MSA designated under paragraph (1), the Secretary

9 shall take the following actions:

10 (A) The Secretary shall annually designate

11 the insurers transacting insurance business in

12 such MSA for which reporting is required under

13 section 3. At a minimum, the Secretary shall

14 annually designate the 25 insurers in such MSA

15 having the largest premium volume in the

16 designated lines of insurance.

17 (B) The Secretary shall also annually des18 ignate any entity providing insurance in a des19 ignated line of insurance as part of a residual

20 market established by State law.

21 (C) The Secretary may designate addi22 tional insurers on the basis of such criteria as

23 the Secretary may by rule develop. Such a rule

24 shall be issued in accordance with section 553

25 of title 5, United States Code. In considering
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1 whether to designate additional insurers, the

2 Secretary shall ensure that—

3 (i) insurers who specialize in selling

4 insurance in urban areas, including surplus

5 lines insurers, are specifically considered

6 for designation notwithstanding their pre7 mium volume, and

8 (ii) that insurers representing at least

9 90 percent of the premium volume in

10 the designated lines of insurance are

11 designated in such MSA.

12 (3) DESIGNATION OF LINES OF INSURANCE.—

13 For each MSA designated under paragraph (1) the

14 Secretary shall designate the lines of property and

15 casualty insurance sold in such MSA for which re16 porting is required under section 3. At a minimum,

17 the Secretary shall annually designate—

18 (A) private passenger automobile insurance

19 (including appropriate sublines and classes),

20 (B) property insurance which does not

21 cover commercial property (including appro22 priate sublines and classes and related cov23 erages such as coverage of property contents

24 and property insured at cash value), and
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1 (C) commercial insurance for small busi2 ness.

3 The Secretary may designate additional lines of in4 surance on the basis of such criteria as the Sec5 retary may by rule develop. Such a rule shall be

6 issued in accordance with section 553 of title 5,

7 United States Code. For purposes of this Act, the

8 designation of a line of insurance includes a designa9 tion of a subline or class of insurance.

10 (4) TIMING OF DESIGNATIONS.—The Secretary

11 shall make the annual designations required by

12 paragraphs (1), (2), and (3) no later than Septem13 ber 1 of the year preceding the year for which re14 porting is required under section 3. The Secretary

15 shall notify persons involved in the designations no

16 later than the October 1 which follows the designa17 tion.

18 (b) OBTAINING INFORMATION.—The Secretary may

19 obtain from insurers such information as the Secretary

20 may require to make designations under subsection (a).

21 SEC. 5. DISCLOSURES TO REJECTED APPLICANTS.

22 (a) IN GENERAL.—Except as provided in subsection

23 (e), the Secretary shall, by regulation issued under section

24 553 of title 5, United States Code—
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1 (1) require insurers to provide to each applicant

2 for insurance in a designated line—

3 (A) reasons for denying an application for

4 such insurance or for canceling or not renewing

5 a policy in force, and

6 (B) actions the applicant may take to qual7 ify for such insurance, and

8 (2) restrict the use insurers may make of infor9 mation relating to—

10 (A) adverse underwriting decisions, or

11 (B) insurance coverage in a residual mar12 ket.

13 (b) MODEL ACTS.—In issuing regulations under sub14 section (a), the Secretary shall consider relevant portions

15 of model acts developed by the National Association of

16 Insurance Commissioners.

17 (c) ENFORCEMENT.—The Secretary may delegate to

18 the States the authority to enforce the requirements of

19 regulations issued under subsection (a).

20 (d) PREEMPTION.—Subsection (a) is not to be con21 strued to preempt any State from imposing on insurers

22 requirements of the type stated in such subsection, includ23 ing requirements which are more stringent or more com24 prehensive.
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1 (e) EXEMPTION.—A regulation issued under sub2 section (a) may not apply to insurance provided under a

3 program underwritten or administered by the United

4 States.

5 (f) DEFINITION.—For purposes of subsection

6 (a)(2)(A), an adverse underwriting decision means any of

7 the following actions with respect to insurance trans8 actions involving insurance coverage which is individually

9 underwritten:

10 (1) A declination of insurance coverage.

11 (2) A termination of insurance coverage.

12 (3) Failure of an agent to apply for insurance

13 coverage with a specific insurance entity which the

14 agent represents and which is requested by the

15 applicant.

16 (4) In the case of property or casualty insur17 ance coverage—

18 (A) place by an insurance entity or agent

19 of a risk with a residual market mechanism, an

20 unauthorized insurer, or an insurance entity

21 which specializes in substandard risks, or

22 (B) the charging of higher rates on the

23 basis of information which differs from that

24 which the applicant or policyholder furnished.
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1 SEC. 6. TERMINATION OF AGENTS.

2 (a) REGULATIONS.—Except as provided in subsection

3 (d), the Secretary shall, by regulation issued under section

4 553 of title 5, United States Code, ensure that the prac5 tices of insurers in terminating agents who handle prop6 erty or casualty insurance do not result in an inappropri7 ate effect on the availability or affordability of insurance

8 from such insurers. Such regulations shall specifically en9 sure that such practices do not result in unfair discrimina10 tion against agents as a result of their geographic loca11 tions or of the geographic locations of their clients. Regu12 lations under subsection (a) shall be stated in terms of

13 minimum standards.

14 (b) PREEMPTION.—Subsection (a) is not to be con15 strued to preempt any State from imposing on insurers

16 requirements of the type stated in such subsection, includ17 ing requirements which are more stringent or more com18 prehensive.

19 (c) ENFORCEMENT.—The Secretary may delegate to

20 the States the enforcement of such regulations.

21 (d) EXEMPTION.—A regulation issued under sub22 section (a) may not apply to insurance provided under a

23 program underwritten or administered by the United

24 States.
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1 SEC. 7. IMPLEMENTATION.

2 The Secretary shall prescribe such regulations as may

3 be necessary to carry out section 3. Such regulations may

4 contain such classifications, differentiations, or other pro5 visions, and may provide for such adjustments and excep6 tions for any class of transactions, as in the judgment of

7 the Secretary are necessary and proper to effectuate the

8 purposes of such section and to prevent circumvention or

9 evasion thereof or to facilitate compliance therewith.

10 SEC. 8. RELATION TO STATE LAWS.

11 This Act does not annul, alter, or affect, or exempt

12 the obligation of any insurer subject to this Act to comply

13 with the laws of any State or subdivision thereof with

14 respect to public disclosure and recordkeeping.

15 SEC. 9. IMPROVED METHODS.

16 The Secretary shall develop, or assist in the improve17 ment of, methods of matching addresses and census tracts

18 to facilitate compliance by insurers, in as economical a

19 manner as possible, with the requirements of this Act.

20 SEC. 10. REPORT.

21 The Secretary shall report to the Committee on Com22 merce of the House of Representatives and the Committee

23 on of the Senate on the implementation of

24 this Act and shall make recommendations to such commit25 tees on such additional legislation as the Secretary deems

26 appropriate to carry out this Act.
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1 SEC. 11. COMPILATION OF AGGREGATE DATA.

2 (a) SCOPE OF DATA AND TABLES.—The Secretary

3 shall compile each year, for each MSA, aggegate data by

4 census tract for all insurers who are subject to section 3

5 or who are exempt from section 3 under subsection

6 (b)(5)(A) of such section. The Secretary shall also produce

7 tables indicating, for each MSA, aggregate insurance un8 derwriting patterns for various categories of census tracts

9 grouped according to location, age of property, income

10 level, and racial characteristics.

11 (b) AVAILABILITY TO PUBLIC.—The data compiled

12 and the tables produced pursuant to subsection (a) shall

13 be made available to the public on a timetable determined

14 by the Secretary but not later than December 31 of the

15 year following the calendar year on which the data and

16 tables are based.

17 SEC. 12. ENFORCEMENT.

18 (a) CIVIL PENALTIES.—An insurer who does not

19 comply with the requirements of section 3 or a regulation

20 issued under section 5 or 6 shall be subject to a civil pen21 alty of not to exceed $5,000 for each day during which

22 such violation continues.

23 (b) INJUNCTION.—The district courts of the United

24 States shall have jurisdiction over a petition of the Sec25 retary to enjoin an insurer from actions which are in viola-
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1 tion of the requirements of section 3 or of a regulation

2 issued under section 5 or 6.

3 SEC. 13. DEFINITIONS.

4 For purposes of this Act:

5 (1) The term ‘‘commercial insurance’’ means

6 any line of property and casualty insurance, except

7 private passenger automobile and homeowner’s in8 surance.

9 (2) The term ‘‘insurer’’ means any corporation,

10 association, society, order, firm, company, partner11 ship, individual, or aggregation of individuals which

12 is subject to examination or supervision by any State

13 insurance regulator, or which is doing or represents

14 an insurance business.

15 (3) The term ‘‘personal lines of insurance’’

16 means any property and casualty insurance issued

17 for noncommercial personal, family, or household

18 purposes.

19 (4) The term ‘‘property and casualty insur20 ance’’ means insurance against loss of or damage to

21 property, insurance against loss of income or extra

22 expense incurred because of loss of, or damage to,

23 property, and insurance against third party liability

24 claims caused by negligence or imposed by statute or

25 contract.
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1 (5) The term ‘‘residual market’’ means an as2 signed risk plan, joint underwriting association, or

3 any similar mechanism designed to make insurance

4 available to those unable to obtain it in the

5 voluntary market.

6 (6) The term ‘‘Secretary’’ means the Secretary

7 of Commerce.

8 (7) The term ‘‘State’’ means any State, the

9 District of Columbia, the Commonwealth of Puerto

10 Rico, the Northern Mariana Islands, the Virgin Is11 lands, American Samoa, and the Trust Territory of

12 the Pacific Islands.

13 SEC. 14. EFFECTIVE DATE

14 The requirements of this Act shall take effect with

15 respect to calendar year 1996.

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