IIA

103D CONGRESS

2D SESSION H. R. 1188

IN THE SENATE OF THE UNITED STATES

JULY 21 (legislative day, JULY 20), 1994

Received; read twice and referred to the Committee on Commerce, Science,

and Transportation

AN ACT

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 In5 surance Disclosure Act’’.
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1 SEC. 2. FINDINGS AND CONSTRUCTION.

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

3 (1) disparities in property and casualty insur4 ance coverage provided by insurers engaged in inter5 state commerce between areas of different incomes

6 and racial composition could adversely affect inter7 state commerce and the cost and availability of in8 surance for consumers, and

9 (2) appropriate disclosures of information by in10 surers would benefit consumers and insurance regu11 lators.

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

13 to, nor shall it be construed to, encourage unsound under14 writing practices.

15 SEC. 3. MAINTENANCE OF INFORMATION AND PUBLIC DIS16 CLOSURE.

17 (a) GENERAL RULE.—

18 (1) DESIGNATED INSURERS.—

19 (A) IN GENERAL.—Except as provided by

20 subsection (b)(7), each designated insurer shall,

21 in accordance with subsection (b), annually

22 compile, submit to the Secretary, and make

23 available to the public for each calendar year

24 and for designated lines of insurance in a des25 ignated MSA—
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1 (i) the total number of policies, total

2 exposure units (in car years and house

3 years), and total earned premium of insur4 ance policies by designated line which were

5 issued by such insurer and the new written

6 exposure units, exposure units canceled,

7 and the exposure units not renewed by

8 such insurer, and

9 (ii) the number of licensed agents of

10 such insurer whose principal place of busi11 ness is located in such designated MSA

12 and the number within each 5-digit zip

13 code in such designated MSA and with re14 spect to each such agent, whether such

15 agent is an employee, independent contrac16 tor working exclusively for such insurer, or

17 an independent contractor appointed to

18 represent such insurer on a non-exclusive

19 basis.

20 (B) SUBMISSIONS AND AVAILABILITY.—

21 The information described in subparagraph (A)

22 shall be—

23 (i) submitted to the Secretary in ac24 cordance with subsection (d), and
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1 (ii) made available to the public, in

2 accordance with subsection (b)(2), for in3 spection and copying, at cost, at the home

4 office of the insurer and at a central de5 pository, established under subsection (c),

6 by the Secretary.

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

8 provided in subsection (b)(7), every insurer which

9 sells an insurance policy in a designated line of in10 surance in a designated MSA and which is not a

11 designated insurer in such MSA shall submit to the

12 Secretary for each calendar year in accordance with

13 subsection (d) and regulations of the Secretary the

14 total exposure units (in car years and house years)

15 of insurance policies in a designated line sold in such

16 MSA. With respect to such policies, the insurer shall

17 report the designated MSA where the insured risks

18 are located for which such insurance is issued and

19 within such MSA report the 5-digit zip code where

20 the risk is located.

21 (b) REQUIREMENTS.—

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

23 maintained and made available under subsection

24 (a)(1) shall be itemized in order to clearly and con25 spicuously disclose the policies, the exposure units,
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1 and the premium amount for each line of insurance

2 for which information is required and be itemized by

3 the 5-digit zip code where the risks are located.

4 (2) AVAILABILITY TO THE PUBLIC.—The infor5 mation required to be maintained and made avail6 able under subsection (a) shall be made available to

7 the public on a timetable determined by the Sec8 retary but not later than October 1 of the calendar

9 year following the calendar year for which the infor10 mation is required to be made available, except that

11 such information shall not be made available to the

12 public until it is available in its entirety but it shall

13 be made available if not all the information required

14 to be reported is available on such October 1 or on

15 the date determined by the Secretary.

16 (3) SPECIFICATION OF DATA.—

17 (A) IN GENERAL.—With respect to infor18 mation which is required to be maintained and

19 made available under subsection (a)(1), the Sec20 retary shall by regulation establish specifica21 tions for the collection and public reporting of

22 such information with respect to the following

23 lines of insurance: private passenger auto24 mobile, homeowners, and dwelling fire and al25 lied lines. The specifications shall—
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1 (i) provide that information be aggre2 gated among similar policyholders and re3 ported on that basis,

4 (ii) be designed to collect information

5 with respect to the availability, cost, and

6 type of insurance coverage between and

7 among various geographic areas,

8 (iii) detail what data elements should

9 be collected,

10 (iv) provide for the collection of infor11 mation on an individual insurer basis,

12 (v) minimize burdens on insurance

13 agents, including independent insurance

14 agents,

15 (vi) provide the data required by

16 clause (ii) with the least burden on insur17 ers, particularly small insurers,

18 (vii) take into account the types of

19 data collected under the Home Mortgage

20 Disclosure Act of 1975,

21 (viii) take into account existing statis22 tical reporting systems in the insurance in23 dustry,

24 (ix) require itemization by 5-digit zip

25 code, and
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1 (x) include information on policies

2 written in a residual market.

3 (B) CONSULTATIONS.—In developing the

4 specifications in subparagraph (A), the Sec5 retary shall consult with—

6 (i) other Federal agencies with appro7 priate expertise,

8 (ii) State insurance regulators,

9 (iii) representatives of the insurance

10 industry, including statistical agents,

11 (iv) representatives of insurance pro12 ducers, including minority insurance pro13 ducers, and

14 (v) consumer, community, and civil

15 rights groups who are representative of a

16 diversity of geographic locations.

17 (C) EFFECTIVE DATE.—The regulation

18 under subparagraph (A) shall be issued no later

19 than 270 days after the date of the enactment

20 of this Act.

21 (4) COMMERCIAL INSURANCE STUDY AND PILOT

22 PROJECT.—

23 (A) STUDY.—The Secretary shall conduct

24 a study regarding the availability of commercial

25 insurance (other than professional liability in-
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1 surance, workers compensation insurance, and

2 title insurance) with special emphasis on the

3 availability of commercial insurance for small

4 business. The study shall focus on—

5 (i) an appropriate definition for small

6 business; and

7 (ii) preliminary views regarding the

8 availability, cost, and type of insurance

9 coverage for small business, which may be

10 based on surveys of members of the small

11 business community.

12 In conducting the study, the Secretary shall

13 consult with interested parties from a diversity

14 of locations, including State insurance regu15 lators, consumer, community, and civil rights

16 groups, representatives of small business, rep17 resentatives of the insurance industry, including

18 statistical agents, and representatives of insur19 ance producers, including minority insurance

20 producers. The Secretary shall submit a report

21 detailing the findings of the study to the Com22 mittee on Energy and Commerce of the House

23 of Representatives and the appropriate commit24 tee of the Senate no later than 18 months fol25 lowing the date of enactment of this Act.
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1 (B) PROPOSAL OF PILOT PROJECT.—Con2 current with the conduct of the study under

3 subparagraph (A), the Secretary shall develop a

4 proposed data collection pilot project in the 5

5 largest MSA’s to help determine the need for

6 any further data collection requirements to

7 evaluate the availability, cost, and type of insur8 ance coverage for small business. In developing

9 the proposed pilot project, the Secretary shall

10 consult with interested parties from a diversity

11 of locations, including State insurance regu12 lators, consumer, community, and civil rights

13 groups, representatives of small business, rep14 resentatives of the insurance industry, including

15 statistical agents, and representatives of insur16 ance producers, including minority insurance

17 producers. The Secretary shall submit a specific

18 proposal for a pilot project to the Committee on

19 Energy and Commerce of the House of Rep20 resentatives and the appropriate committee of

21 the Senate no later than 18 months following

22 the date of enactment of this Act.

23 (C) SPECIFICATIONS FOR PILOT

24 PROJECT.—Immediately following the submis25 sion of the proposal for a pilot project, the Sec-
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1 retary shall, by regulation, establish specifica2 tions for the collection and public reporting of

3 information with respect to commercial insur4 ance for the proposed pilot project. As part of

5 the specifications, the Secretary shall designate

6 the 5 largest MSA’s for purposes of the pilot

7 project. The specifications shall—

8 (i) provide that information be aggre9 gated among similar policyholders and re10 ported on that basis,

11 (ii) be designed to collect information

12 with respect to the availability, cost, and

13 type of insurance coverage between and

14 among various geographic areas,

15 (iii) provide for the collection of infor16 mation on an individual insurer basis,

17 (iv) provide the data required by

18 clause (ii) with the least burden on insur19 ers, particularly small insurers, and insur20 ance agents, including independent insur21 ance agents,

22 (v) take into account existing statis23 tical reporting systems in the insurance in24 dustry and use existing data sources to the

25 maximum practical extent,
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1 (vi) include information on policies

2 written in a residual market,

3 (vii) detail what data elements should

4 be collected,

5 (viii) detail what insurers should be

6 designated insurers for purposes of the

7 pilot project,

8 (ix) detail what lines of commercial

9 insurance should be designated for pur10 poses of the pilot project, with particular

11 consideration given to commercial fire and

12 business owners lines,

13 (x) include an appropriate definition

14 of small business, if necessary,

15 (xi) provide data representative of at

16 least 2 years of experience and provide

17 that the pilot project will terminate no

18 later than 2 years after its inception, and

19 (xii) provide adequate lead time to in20 surers designated under clause (viii) for

21 the reporting to begin.

22 The regulation shall be issued within 2 years of

23 the date of enactment of this Act.

24 (D) REPORTING UNDER PILOT PROJECT.—

25 Insurers designated under subparagraph
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1 (C)(viii) shall report to the Secretary with re2 spect to lines of insurance designated under

3 subparagraph (C)(ix) in the 5 largest MSA’s,

4 pursuant to the regulation issued by the Sec5 retary in subparagraph (C).

6 (E) ANALYSIS OF DATA UNDER PILOT

7 PROJECT.—At the conclusion of the pilot

8 project, the Secretary shall analyze the data

9 collected. Within 1 year of the conclusion of the

10 pilot project, the Secretary shall report to the

11 Committee on Energy and Commerce of the

12 House of Representatives and the appropriate

13 committee of the Senate on—

14 (i) any conclusions of the Secretary

15 regarding the data collected under the pilot

16 project, particularly regarding the avail17 ability, cost, and type of commercial insur18 ance for small business, and

19 (ii) the need for further data collec20 tion requirements to evaluate the availabil21 ity, cost, and type of such coverage or to

22 help ensure the availability of such cov23 erage.

24 (5) PERIOD OF MAINTENANCE.—Any informa25 tion required to be compiled and made available
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1 under subsection (a) shall be maintained and made

2 available for a period of 3 years after the close of

3 the first year during which such information is re4 quired to be maintained and made available.

5 (6) FORMAT FOR DISCLOSURES.—Subject to

6 subsection (c), the Secretary shall prescribe a stand7 ard format for making information available as re8 quired by subsection (a). Such format shall encour9 age the submission of information in a form read10 able by a computer.

11 (7) EXEMPTION.—

12 (A) SECRETARIAL ACTION.—If the Sec13 retary determines that a State has enacted a

14 law, or otherwise implemented a requirement

15 under which—

16 (i) insurers operating in that State

17 are subject to disclosure requirements on a

18 5-digit zip code basis substantially similar

19 to those of subsection (a),

20 (ii) there are adequate provisions for

21 enforcement, and

22 (iii) the information disclosed under

23 the State law or requirement is made avail24 able to the Secretary and the public in a
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1 manner similar to other information dis2 closed under subsection (a),

3 then the Secretary shall by regulation exempt

4 insurers operating in that State from complying

5 with the requirements of subsection (a) with re6 spect to that State’s portions of the designated

7 MSA’s. If the Secretary determines that the

8 State law or requirement no longer meets the

9 criteria of clauses (i) through (iii) or is no

10 longer in effect, the Secretary shall by regula11 tion revoke the exemption.

12 (B) UNITED STATES PROGRAM.—Report13 ing shall not be required under subsection (a)

14 with respect to insurance provided by a pro15 gram underwritten or administered by the Unit16 ed States.

17 (c) PUBLIC ACCESS SYSTEM.—The Secretary shall

18 implement a system to facilitate public access to informa19 tion required to be made available to the public under sub20 section (a). Such system shall include arrangements for

21 a central depository of information in each designated

22 MSA and for a telephone number which can be used by

23 the public, at cost, to request such information. State24 ments shall be made available to the public for inspection

25 and copying at such central depository of information for
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1 all designated insurers within such MSA. The Secretary

2 shall also make copies of such statements available in

3 forms readable by widely used personal computers, such

4 as in disc format. The Secretary may charge a fee for such

5 information, which may not exceed the amount, deter6 mined by the Secretary, that is equal to the cost of repro7 ducing the information.

8 (d) SUBMISSION TO SECRETARY.—With respect to

9 the information required to be submitted under subsection

10 (a) to the Secretary, the Secretary shall develop regula11 tions prescribing the format and method for submitting

12 such information. Such regulations shall ensure uniform13 ity among insurers, to the extent practicable, in the format

14 used for reporting, including the definitions of data ele15 ments. Any reporting insurer may submit in writing to

16 the Secretary such additional data or explanations as it

17 deems relevant to the decision by such insurer to sell in18 surance.

19 SEC. 4. DESIGNATIONS.

20 (a) DESIGNATIONS BY THE SECRETARY.—

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

22 shall designate the MSA’s for which reporting is re23 quired under section 3(a). The Secretary shall des24 ignate the 25 MSA’s having the largest population.
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1 (2) DESIGNATION OF INSURERS.—For each

2 MSA designated under paragraph (1), the Secretary

3 shall take the following actions:

4 (A) The Secretary shall designate the in5 surers transacting insurance business in such

6 MSA for which reporting is required under sec7 tion 3(a). At a minimum, the Secretary shall

8 designate the 25 insurers in such MSA having

9 the largest premium volume in the designated

10 lines of insurance in each State in which such

11 MSA is located.

12 (B) In addition to the insurers designated

13 under subparagraph (A), the Secretary shall

14 also designate any entity primarily providing in15 surance in a designated line of insurance as

16 part of a residual market established by State

17 law.

18 (C) The Secretary shall also designate, in

19 addition to the insurers designated under sub20 paragraphs (A) and (B), insurers who specialize

21 in selling insurance in urban areas, including

22 surplus lines insurers.

23 (D) The Secretary shall also designate, in

24 addition to the insurers designated under sub25 paragraph (A), (B), and (C) insurers such that
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1 insurers representing at least 80 percent of the

2 premium volume in each State in which such

3 MSA is located in the designated line of insur4 ance are designated in such MSA. The Sec5 retary may not designate additional insurers

6 under this subparagraph if their market share

7 in the designated line of insurance in the appli8 cable States, as measured by premium volume

9 in each State in which such MSA is located, is

10 under 1 percent.

11 (E) In addition to the insurers designated

12 under subparagraph (A), (B), (C), and (D) the

13 Secretary may by regulation designate addi14 tional insurers in a MSA if the designation of

15 additional insurers is necessary to provide valid

16 data with respect to the availability, cost, and

17 type of insurance in the MSA.

18 (F) The Secretary shall revoke the des19 ignation of an insurer designated under sub20 paragraph (A) as follows: If such designated in21 surer has a market share in a designated line

22 of insurance in a MSA, as measured by pre23 mium volume in each State in which such MSA

24 is located, of under 1 percent, the Secretary

25 shall revoke the designation of such insurer be-
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1 ginning with the insurer with the smallest mar2 ket share of such insurance if the remainder of

3 the designated insurers have a market share of

4 at least 75 percent of such insurance as meas5 ured by premium volume in each State in which

6 such MSA is located. In addition, the Secretary

7 may revoke the designation of any insurer des8 ignated under subparagraph (A) with a market

9 share in a designated line of insurance in a

10 MSA, as measured by premium volume in each

11 State in which such MSA is located, of under

12 1 percent if such designation has not been re13 voked under this subparagraph and if such in14 surer primarily sells insurance in rural areas of

15 such MSA.

16 (G) For purposes of this paragraph, insur17 ers which are affiliated or are members of the

18 same group shall be considered together as one

19 insurer.

20 (3) DESIGNATION OF LINES OF INSURANCE.—

21 For each MSA designated under paragraph (1) the

22 following are the designated lines of property and

23 casualty insurance for which reporting is required

24 under section 3:
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1 (A) Private passenger automobile insur2 ance.

3 (B) Homeowners insurance.

4 (C) Dwelling fire and allied lines of insur5 ance.

6 (4) TIMING OF DESIGNATIONS.—

7 (A) INITIAL DESIGNATIONS.—The Sec8 retary shall make initial designations required

9 by paragraphs (1), (2), and (3) no later than

10 July 1 of the year preceding the first year for

11 which reporting is required under section 3.

12 Such initial designations shall be effective for 5

13 calendar years from the date of designation.

14 (B) SUBSEQUENT DESIGNATIONS.—Not

15 later than July 1 of the year preceding the fifth

16 year after a designation under subparagraph

17 (A) or this subparagraph, the Secretary shall

18 make another designation to be effective upon

19 the expiration of such 5 years and such des20 ignation shall be effective for 5 calendar years

21 from the date of designation.

22 (C) NOTICE.—The Secretary shall notify

23 persons involved in the designations no later

24 than the July 15 which follows the designation.
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1 (b) OBTAINING INFORMATION.—The Secretary may

2 obtain from insurers such information as the Secretary

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

4 SEC. 5. TASK FORCE ON AGENCY APPOINTMENTS.

5 (a) ESTABLISHMENT.—Within 90 days of the date of

6 the enactment of this Act, the Secretary shall establish

7 a task force on insurance agency appointments. The task

8 force shall—

9 (1) consist of representatives of appropriate

10 Federal agencies, property and casualty insurance

11 agents, including specifically minority insurance

12 agents, property and casualty insurance companies,

13 State insurance regulators, and public interest

14 groups,

15 (2) have a significant representation from mi16 nority insurance agents, and

17 (3) be chaired by the Secretary or the Sec18 retary’s designee.

19 (b) FUNCTION.— The task force shall—

20 (1) review the problems inner city and minority

21 agents may have in receiving appointments to rep22 resent property and casualty insurance companies,

23 (2) review the practices of insurers in terminat24 ing agents and consider the effect such practices
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1 have on the availability or cost of insurance, espe2 cially in underserved areas, and

3 (3) recommend solutions to improve the ability

4 of inner city and minority insurance agents to mar5 ket property and casualty insurance products, in6 cluding steps property and casualty insurance com7 panies should take to increase their appointments of

8 such agents.

9 (c) REPORT AND TERMINATION.—The task force

10 shall report to the Committee on Energy and Commerce

11 of the House of Representatives and the appropriate Com12 mittee of the Senate its findings under paragraphs (1) and

13 (2) of subsection (b) and its recommendations under para14 graph (3) of subsection (b) within 2 years after the date

15 of the enactment of this Act. The task force shall termi16 nate when the report is submitted to the Committees.

17 SEC. 6. IMPLEMENTATION OF SECTION 3.

18 (a) REGULATIONS.—The Secretary shall promulgate

19 such regulations as may be necessary to carry out section

20 3. Such regulations may—

21 (1) contain such classifications, differentiations,

22 or other provisions, and

23 (2) may provide for such adjustments and ex24 ceptions for any class of transactions,
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1 as in the judgment of the Secretary are necessary and

2 proper to effectuate the purposes of such section and to

3 prevent circumvention or evasion thereof or to facilitate

4 compliance therewith.

5 (b) DATA COLLECTION CONTRACTOR.—The Sec6 retary may contract with a data collection contractor to

7 carry out the Secretary’s responsibilities under section 3

8 if the contractor agrees to collect and make available the

9 data pursuant to the terms and conditions of such section.

10 A statistical agent may also be a data contractor.

11 (c) ROLE OF STATISTICAL AGENTS.—

12 (1) ACCEPTANCE OF DATA.—The Secretary

13 and, if applicable, the contractor under the sub14 section (b) contract may accept data reported under

15 section 3(a) by a statistical agent acting on behalf

16 of more than one insurer if—

17 (A) the statistical plan used by the statis18 tical agent for the reporting of data on insur19 ance provides for the reporting of data in a

20 manner compatible with section 3(a),

21 (B) the statistical agent reports such data

22 on an individual insurer basis, and, at the dis23 cretion of the Secretary, on an aggregate basis,
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1 (C) the statistical agent provides adequate

2 procedures to protect the integrity of the data

3 reported,

4 (D) the statistical agent has procedures in

5 place which ensure that data reported under the

6 statistical plan in connection with reporting

7 under this Act and submitted to the Secretary

8 are not subject to adjustment by the statistical

9 agent or an insurer for reasons other than tech10 nical accuracy and conformance to the statis11 tical plan,

12 (E) the statistical agent ensures that the

13 data of one insurer is not subject to review by

14 other insurers before public availability, and

15 (F) the statistical agent provides for the

16 reporting of data in a manner compatible with

17 the format prescribed by the Secretary under

18 section 3(d).

19 (2) DISCONTINUANCE OF DATA ACCEPTANCE.—

20 The Secretary may, after providing an opportunity

21 for a hearing, discontinue accepting data reported

22 under section 3(a) by a statistical agent acting on

23 behalf of more than one insurer if the Secretary de24 termines the requirements for acceptance of data in

25 paragraph (1) are no longer met.
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1 (d) ROLE OF GAO.—The Comptroller General shall

2 have the authority to review and audit any data collection

3 and reporting performed under section 3, whether by the

4 Secretary, the contractor under the subsection (b) con5 tract, or a statistical agent, to ensure that the integrity

6 of the data collected and reported is protected.

7 (e) BURDENS ON INSURANCE AGENTS.—In prescrib8 ing regulations under this Act, the Secretary shall take

9 into consideration the administrative, paperwork, and

10 other burdens on insurance agents, including independent

11 insurance agents, involved in complying with the require12 ments of this Act and shall minimize the burdens imposed

13 by such requirements with respect to such agents.

14 SEC. 7. RELATION TO STATE LAWS.

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

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

17 with the laws of any State or subdivision thereof with re18 spect to public disclosure and recordkeeping.

19 SEC. 8. COMPILATION OF AGGREGATE DATA.

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

21 shall compile each year, for each MSA, data aggregated

22 by 5-digit zip code for all insurers who are subject to sec23 tion 3 or who are exempt from section 3 under subsection

24 (b)(7)(A) of such section. The Secretary shall also produce

25 tables indicating, for each MSA, insurance policies aggre-
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1 gated for various categories of 5-digit zip codes grouped

2 according to location, age of property, income level, and

3 racial characteristics of neighborhood.

4 (b) AGGREGATION OF INFORMATION.—Statistical

5 agents may aggregate the data of insurers that report to

6 them and may provide such information to the Secretary.

7 The Secretary may also provide the individual company

8 data submitted by insurers to statistical agents for aggre9 gation.

10 (c) AVAILABILITY TO PUBLIC.—The data compiled

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

12 be made available to the public on a timetable determined

13 by the Secretary but not later than October 1 of the year

14 following the calendar year on which the data and tables

15 are based.

16 SEC. 9. ENFORCEMENT.

17 (a) CIVIL PENALTIES.—Any insurer who is deter18 mined by the Secretary, after providing opportunity for

19 a hearing on the record, to have violated the requirements

20 of section 3 shall be subject to a civil penalty of not to

21 exceed $5,000 for each day during which such violation

22 continues.

23 (b) INJUNCTION.—The Secretary may bring an ac24 tion in an appropriate United States district court for ap-
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1 propriate declaratory and injunctive relief against any in2 surer who violates the requirements of section 3.

3 (c) INSURER LIABILITY.—An insurer shall be respon4 sible under subsections (a) and (b) for any violation of

5 a statistical agent acting on behalf of the insurer.

6 SEC. 10. SUNSET.

7 (a) EXPIRATION.—Except as provided in subsection

8 (b), this Act shall not be in effect after the expiration of

9 5 years from its effective date. Prior to the expiration of

10 4 years from such date, the Secretary shall report to the

11 Energy and Commerce Committee of the House of Rep12 resentatives and the appropriate committee of the Sen13 ate—

14 (1) the quality of data received under section 3

15 and the effectiveness of the data requirement, in16 cluding the relation between the cost of such data

17 gathering and the benefits from having such data

18 available,

19 (2) the appropriateness of the geographic data

20 reporting units,

21 (3) the need for continued reporting by the des22 ignated insurers in urban areas,

23 (4) the efforts of insurers to meet the insurance

24 needs of minority and low-income neighborhoods,

25 and
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1 (5) such other information as the Secretary de2 termines will assist in considering an extension of

3 this Act.

4 (b) EXTENSION.—Based on the Secretary’s report on

5 the need described in subsection (a)(3) and the informa6 tion described in subsection (a)(5), the Secretary may ex7 tend this Act for one period of 2 years.

8 SEC. 11. STUDIES.

9 (a) STUDY OF INFORMATION ON INSURANCE APPLI10 CANTS.—

11 (1) IN GENERAL.—The Secretary shall conduct

12 a study to determine the feasibility and utility of the

13 collection of information with respect to the charac14 teristics of applicants for insurance and reasons for

15 rejection of applicants. The study shall examine the

16 extent to which—

17 (A) oral applications or representations are

18 used by insurers and agents in making deter19 minations regarding whether or not to insure a

20 prospective insured,

21 (B) written applications are used by insur22 ers and agents in making determinations re23 garding whether or not to insure a prospective

24 insured,
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1 (C) written applications are submitted

2 after the insurer or agent has already made a

3 determination to provide insurance to a pro4 spective insured or has determined that the pro5 spective insured is eligible for insurance, and

6 (D) prospective insureds are discouraged

7 from submitting applications for insurance

8 based, in whole or in part, on—

9 (i) the location of the risk to be in10 sured,

11 (ii) the race or ethnicity of the pro12 spective insured,

13 (iii) the racial or ethnic composition of

14 the neighborhood in which the risk to be

15 insured is located, and

16 (iv) in the case of residential property

17 insurance, the age and value of the risk to

18 be insured.

19 (2) REPORT.—The Secretary shall report the

20 results of the study under paragraph (1) to the

21 Committee on Energy and Commerce of the House

22 of Representatives and the appropriate Committee of

23 the Senate within 18 months of the date of the en24 actment of this Act.
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1 (b) STUDY OF INSURER ACTIONS TO MEET INSUR2 ANCE NEEDS OF CERTAIN NEIGHBORHOODS.—The Sec3 retary shall conduct a study of various practices, actions,

4 programs, and methods undertaken by insurers to meet

5 the property and casualty insurance needs of residents of

6 low- and moderate-income neighborhoods, minority neigh7 borhoods, and small businesses located in such neighbor8 hoods. The Secretary may establish a task force of inter9 ested parties, including representatives of insurance com10 panies, insurance agents, including minority agents, and

11 consumer representatives to discuss additional practices,

12 actions, programs, and methods to meet these needs. The

13 Secretary shall report the results of the study, including

14 any recommendations, to the Committee on Energy and

15 Commerce of the House of Representatives and the appro16 priate Committee of the Senate no later than 2 years after

17 the date of the enactment of this Act.

18 SEC. 12. DEFINITIONS.

19 For purposes of this Act:

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

21 any line of property and casualty insurance, except

22 private passenger automobile and homeowner’s in23 surance.
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1 (2) The term ‘‘designated insurer’’ means an

2 insurer designated by the Secretary pursuant to sec3 tion 4(a)(2).

4 (3) The term ‘‘designated line’’ means a line of

5 insurance specified in section 4(a)(3).

6 (4) The term ‘‘exposure units’’ means units in7 sured against risk of loss by an insurer and the term

8 ‘‘units’’ means an automobile or the number of units

9 in a building.

10 (5) The term ‘‘insurer’’ means any corporation,

11 association, society, order, firm, company, partner12 ship, individual, or aggregation of individuals which

13 is subject to examination or supervision by any State

14 insurance regulator, or which is doing or represents

15 an insurance business. Such term does not include

16 an individual or entity which represents an insurer

17 as agent for the purpose of selling or which rep18 resents a consumer as a broker for the purpose of

19 buying insurance.

20 (6) The term ‘‘MSA’’ means a Metropolitan

21 Statistical Area or a Consolidated Metropolitan Sta22 tistical Area and the term ‘‘designated MSA’’ means

23 an MSA designated by the Secretary pursuant to

24 section 4(a)(1).
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1 (7) The term ‘‘property and casualty insur2 ance’’ means insurance against loss of or damage to

3 property, insurance against loss of income or extra

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

5 property, and insurance against third party liability

6 claims caused by negligence or imposed by statute or

7 contract.

8 (8) The term ‘‘residual market’’ means an as9 signed risk plan, joint underwriting association, or

10 any similar mechanism designed to make insurance

11 available to those unable to obtain it in the vol12 untary market.

13 (9) The term ‘‘Secretary’’ means the Secretary

14 of Commerce.

15 (10) The term ‘‘State’’ means any State, the

16 District of Columbia, the Commonwealth of Puerto

17 Rico, the Northern Mariana Islands, the Virgin Is18 lands, American Samoa, and the Trust Territory of

19 the Pacific Islands.

20 SEC. 13. EFFECTIVE DATE.

21 The requirements of this Act shall take effect with

22 respect to information on insurance described in section

23 3 and developed in and after calendar year 1995.

Passed the House of Representatives July 20, 1994.

Attest: DONNALD K. ANDERSON,

Clerk.
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