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103D CONGRESS

1ST SESSION H. R. 1188

To provide for disclosures for insurance in interstate commerce.

IN THE HOUSE OF REPRESENTATIVES

MARCH 3, 1993

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

the Committee on Energy and 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

2 insurance 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) The gender and racial characteristics of

3 the applicants for such insurance.

4 (J) A notation if such insurance was

5 issued in a voluntary or residual market.

6 (K) The reason for any declination, can7 cellation, or non-renewal made for such insur8 ance.

9 (L) With respect to property insurance,

10 the market value of the property insured and

11 the type and use of property insured.

12 (3) PERIOD OF MAINTENANCE.—Any informa13 tion required to be compiled and made available

14 under subsection (a) shall be maintained and made

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

16 the first year during which such information is

17 required to be maintained and made available.

18 (4) FORMAT FOR DISCLOSURES.—Subject to

19 subsection (c), the Secretary shall prescribe a stand20 ard format for making information available as re21 quired by subsection (a). Such format shall encour22 age the submission of information in a form read23 able by a computer.

24 (5) EXEMPTION.—
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1 (A) SECRETARIAL ACTION.—The Secretary

2 may by regulation exempt from the require3 ments of subsection (a) any insurer within any

4 State if the Secretary determines that under

5 the laws of such State that such insurer is sub6 ject to disclosure requirements on a census

7 tract basis substantially similar to those of sub8 section (a) and that such law contains adequate

9 provisions for enforcement.

10 (B) UNITED STATES PROGRAM.—Report11 ing shall not be required under subsection (a)

12 with respect to insurance provided by a

13 program underwritten or administered by the

14 United States.

15 (6) COMPLETED APPLICATION.—For purposes

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

17 shall define ‘‘completed applications’’ to—

18 (A) ensure that the disclosure required by

19 such subsections appropriately reflects the char20 acteristics of the applicants interested in pur21 chasing insurance in a designated MSA, and

22 (B) prevent insurers from evading the in23 tent of such subsections through practices de24 signed to discourage applicants from completing

25 applications.
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1 (c) ACCESS SYSTEM.—The Secretary, shall imple2 ment a system to facilitate access to information required

3 to be maintained and made available under subsection (a).

4 Such system shall include arrangements for a central de5 pository of information in each designated MSA and for

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

7 cost, to request such information. Statements shall be

8 made available to the public for inspection and copying

9 at such central depository of information for all designated

10 insurers within such MSA.

11 (d) SUBMISSION TO SECRETARY.—The information

12 referred to in subsection (a) shall be submitted to the Sec13 retary. The Secretary shall develop regulations prescrib14 ing—

15 (1) the format for making such information

16 available,

17 (2) the method for submission of such informa18 tion, and

19 (3) the procedures for making the information

20 available to the public.

21 Any reporting insurer may submit in writing to the Sec22 retary such additional data or explanations as it deems

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

24 SEC. 4. DESIGNATIONS.

25 (a) DESIGNATIONS BY THE SECRETARY.—
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1 (1) DESIGNATIONS OF MSA’S.—The Secretary

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

3 which reporting is required under section 3. At a

4 minimum, the Secretary shall designate the 150

5 MSA’s having the largest population. The Secretary

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

7 criteria as the Secretary may by rule develop. Such

8 a rule shall be issued in accordance with section 553

9 of title 5, United States Code.

10 (2) DESIGNATION OF INSURERS.—For each

11 MSA designated under paragraph (1), the Secretary

12 shall take the following actions:

13 (A) The Secretary shall annually designate

14 the insurers transacting insurance business in

15 such MSA for which reporting is required under

16 section 3. At a minimum, the Secretary shall

17 annually designate the 25 insurers in such MSA

18 having the largest premium volume in the

19 designated lines of insurance.

20 (B) The Secretary shall also annually des21 ignate any entity providing insurance in a des22 ignated line of insurance as part of a residual

23 market established by State law.

24 (C) The Secretary may designate addi25 tional insurers on the basis of such criteria as
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1 the Secretary may by rule develop. Such a rule

2 shall be issued in accordance with section 553

3 of title 5, United States Code. In considering

4 whether to designate additional insurers, the

5 Secretary shall ensure that—

6 (i) insurers who specialize in selling

7 insurance in urban areas, including surplus

8 lines insurers, are specifically considered

9 for designation notwithstanding their pre10 mium volume, and

11 (ii) that insurers representing at least

12 90 percent of the premium volume in

13 the designated lines of insurance are

14 designated in such MSA.

15 (3) DESIGNATION OF LINES OF INSURANCE.—

16 For each MSA designated under paragraph (1) the

17 Secretary shall designate the lines of property and

18 casualty insurance sold in such MSA for which re19 porting is required under section 3. At a minimum,

20 the Secretary shall annually designate—

21 (A) private passenger automobile insurance

22 (including appropriate sublines and classes),

23 (B) property insurance which does not

24 cover commercial property (including appro25 priate sublines and classes and related cov-
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1 erages such as coverage of property contents

2 and property insured at cash value), and

3 (C) commercial insurance for small busi4 ness.

5 The Secretary may designate additional lines of in6 surance on the basis of such criteria as the Sec7 retary may by rule develop. Such a rule shall be

8 issued in accordance with section 553 of title 5,

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

10 designation of a line of insurance includes a designa11 tion of a subline or class of insurance.

12 (4) TIMING OF DESIGNATIONS.—The Secretary

13 shall make the annual designations required by

14 paragraphs (1), (2), and (3) no later than Septem15 ber 1 of the year preceding the year for which re16 porting is required under section 3. The Secretary

17 shall notify persons involved in the designations no

18 later than the October 1 which follows the designa19 tion.

20 (b) OBTAINING INFORMATION.—The Secretary may

21 obtain from insurers such information as the Secretary

22 may require to make designations under subsection (a).
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1 SEC. 5. DISCLOSURES TO REJECTED APPLICANTS.

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

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

4 553 of title 5, United States Code—

5 (1) require insurers to provide to each applicant

6 for insurance in a designated line—

7 (A) reasons for denying an application for

8 such insurance or for canceling or not renewing

9 a policy in force, and

10 (B) actions the applicant may take to qual11 ify for such insurance, and

12 (2) restrict the use insurers may make of infor13 mation relating to—

14 (A) adverse underwriting decisions, or

15 (B) insurance coverage in a residual mar16 ket.

17 (b) MODEL ACTS.—In issuing regulations under sub18 section (a), the Secretary shall consider relevant portions

19 of model acts developed by the National Association of

20 Insurance Commissioners.

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

22 the States the authority to enforce the requirements of

23 regulations issued under subsection (a).

24 (d) PREEMPTION.—Subsection (a) is not to be con25 strued to preempt any State from imposing on insurers

26 requirements of the type stated in such subsection, includ-
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1 ing requirements which are more stringent or more com2 prehensive.

3 (e) EXEMPTION.—A regulation issued under sub4 section (a) may not apply to insurance provided under a

5 program underwritten or administered by the United

6 States.

7 (f) DEFINITION.—For purposes of subsection

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

9 the following actions with respect to insurance trans10 actions involving insurance coverage which is individually

11 underwritten:

12 (1) A declination of insurance coverage.

13 (2) A termination of insurance coverage.

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

15 coverage with a specific insurance entity which the

16 agent represents and which is requested by the

17 applicant.

18 (4) In the case of property or casualty insur19 ance coverage—

20 (A) place by an insurance entity or agent

21 of a risk with a residual market mechanism, an

22 unauthorized insurer, or an insurance entity

23 which specializes in substandard risks, or
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1 (B) the charging of higher rates on the

2 basis of information which differs from that

3 which the applicant or policyholder furnished.

4 SEC. 6. TERMINATION OF AGENTS.

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

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

7 553 of title 5, United States Code, ensure that the prac8 tices of insurers in terminating agents who handle prop9 erty or casualty insurance do not result in an inappropri10 ate effect on the availability or affordability of insurance

11 from such insurers. Such regulations shall specifically en12 sure that such practices do not result in unfair discrimina13 tion against agents as a result of their geographic loca14 tions or of the geographic locations of their clients. Regu15 lations under subsection (a) shall be stated in terms of

16 minimum standards.

17 (b) PREEMPTION.—Subsection (a) is not to be con18 strued to preempt any State from imposing on insurers

19 requirements of the type stated in such subsection, includ20 ing requirements which are more stringent or more com21 prehensive.

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

23 the States the enforcement of such regulations.

24 (d) EXEMPTION.—A regulation issued under sub25 section (a) may not apply to insurance provided under a
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1 program underwritten or administered by the United

2 States.

3 SEC. 7. IMPLEMENTATION.

4 The Secretary shall prescribe such regulations as may

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

6 contain such classifications, differentiations, or other pro7 visions, and may provide for such adjustments and excep8 tions for any class of transactions, as in the judgment of

9 the Secretary are necessary and proper to effectuate the

10 purposes of such section and to prevent circumvention or

11 evasion thereof or to facilitate compliance therewith.

12 SEC. 8. RELATION TO STATE LAWS.

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

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

15 with the laws of any State or subdivision thereof with

16 respect to public disclosure and recordkeeping.

17 SEC. 9. IMPROVED METHODS.

18 The Secretary shall develop, or assist in the improve19 ment of, methods of matching addresses and census tracts

20 to facilitate compliance by insurers, in as economical a

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

22 SEC. 10. REPORT.

23 The Secretary shall report to the Committee on En24 ergy and Commerce of the House of Representatives and

25 the Committee on of the Senate on the im-
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1 plementation of this Act and shall make recommendations

2 to such committees on such additional legislation as the

3 Secretary deems appropriate to carry out this Act.

4 SEC. 11. COMPILATION OF AGGREGATE DATA.

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

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

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

8 or who are exempt from section 3 under subsection

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

10 tables indicating, for each MSA, aggregate insurance un11 derwriting patterns for various categories of census tracts

12 grouped according to location, age of property, income

13 level, and racial characteristics.

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

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

16 be made available to the public on a timetable determined

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

18 year following the calendar year on which the data and

19 tables are based.

20 SEC. 12. ENFORCEMENT.

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

22 comply with the requirements of section 3 or a regulation

23 issued under section 5 or 6 shall be subject to a civil pen24 alty of not to exceed $5,000 for each day during which

25 such violation continues.
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1 (b) INJUNCTION.—The district courts of the United

2 States shall have jurisdiction over a petition of the Sec3 retary to enjoin an insurer from actions which are in viola4 tion of the requirements of section 3 or of a regulation

5 issued under section 5 or 6.

6 SEC. 13. DEFINITIONS.

7 For purposes of this Act:

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

9 any line of property and casualty insurance, except

10 private passenger automobile and homeowner’s in11 surance.

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

13 association, society, order, firm, company, partner14 ship, individual, or aggregation of individuals which

15 is subject to examination or supervision by any State

16 insurance regulator, or which is doing or represents

17 an insurance business.

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

19 means any property and casualty insurance issued

20 for noncommercial personal, family, or household

21 purposes.

22 (4) The term ‘‘property and casualty insur23 ance’’ means insurance against loss of or damage to

24 property, insurance against loss of income or extra

25 expense incurred because of loss of, or damage to,
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1 property, and insurance against third party liability

2 claims caused by negligence or imposed by statute or

3 contract.

4 (5) The term ‘‘residual market’’ means an as5 signed risk plan, joint underwriting association, or

6 any similar mechanism designed to make insurance

7 available to those unable to obtain it in the

8 voluntary market.

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

10 of Commerce.

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

12 District of Columbia, the Commonwealth of Puerto

13 Rico, the Northern Mariana Islands, the Virgin Is14 lands, American Samoa, and the Trust Territory of

15 the Pacific Islands.

16 SEC. 14. EFFECTIVE DATE

17 The requirements of this Act shall take effect with

18 respect to calendar year 1995.

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