I 

117TH CONGRESS 

1ST SESSION H. R. 1270 

To prohibit private passenger automobile insurers from using certain income 

proxies to determine insurance rates and eligibility. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 23, 2021 

Mrs. WATSON COLEMAN (for herself, Ms. TLAIB, Mr. TAKANO, Mr. THOMPSON of Mississippi, Mrs. HAYES, Mr. JONES, Ms. OCASIO-CORTEZ, Mr. 

GARCI ́A of Illinois, Ms. LEE of California, Ms. NORTON, Mr. BISHOP of 

Georgia, and Mr. HASTINGS) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the 

Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions 

as fall within the jurisdiction of the committee concerned 

A BILL 

To prohibit private passenger automobile insurers from using 

certain income proxies to determine insurance rates and 

eligibility. 

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 ‘‘Prohibit Auto Insur5 ance Discrimination Act’’ or the ‘‘PAID Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 


kjohnson on DSK79L0C42PROD with BILLS
2 

•HR 1270 IH

1 (1) Private passenger automobile insurance 

2 companies are institutions which help spread risk of 

3 loss over a collective group of policyholders. 

4 (2) Private passenger automobile insurance is 

5 mandated in all States but New Hampshire. Legal 

6 penalties for operating a vehicle without liability in7 surance in these States range from fines, to license 

8 suspensions or revocations, to imprisonment. 

9 (3) The private passenger automobile insurance 

10 industry uses different variables to predict the over11 all costs and risks of drivers. The analysis and use 

12 of these variables ultimately help the automobile in13 surer set premium rates charged to consumers which 

14 the automobile insurer determines to be actuarially 

15 supported. 

16 (4) A pure loss ratio, a measurement of profit17 ability in insurance, is defined as losses divided by 

18 premiums. Statistical correlations between certain 

19 variables and pure loss ratios should be interpreted 

20 to mean that the selected variable relates to profit21 ability, but not necessarily to the risk that an indi22 vidual will get into an automobile accident. 

23 (5) A growing trend in the private passenger 

24 automobile insurance industry is to use income prox25 ies for underwriting and rating. The use of income 


kjohnson on DSK79L0C42PROD with BILLS
3 

•HR 1270 IH

1 proxies such as a driver’s education level, occupa2 tion, employment status, home ownership status, 

3 credit score, consumer report, previous insurer, and 

4 prior purchase of insurance by the industry as vari5 ables that significantly influence the insurance pre6 miums charged to drivers has become commonplace. 

7 Use of these income proxies in this fashion results 

8 in higher rates being charged to lower income driv9 ers while lower rates are being charged to the more 

10 affluent driver. 

11 (6) The American public is largely unaware 

12 that a person’s education level, occupation, employ13 ment status, home ownership status, credit score, 

14 consumer report, zip code, census tract, previous in15 surer, and prior purchase of insurance may be sig16 nificant factors used to determine eligibility for pre17 ferred auto insurance rates regardless of the per18 son’s driving history. As a result of the individual’s 

19 ineligibility for preferred rates, the driver’s policy 

20 and rate will be only offered from an affiliate com21 pany that has higher rates. 

22 SEC. 3. REQUIREMENTS FOR PRIVATE PASSENGER AUTO23 MOBILE INSURERS. 

24 (a) USE OF CERTAIN FACTORS AND INCOME PROX25 IES PROHIBITED.—It shall be unlawful for a private pasVerDate Sep 11 2014 23:04 Mar 20, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1270.IH H1270

kjohnson on DSK79L0C42PROD with BILLS
4 

•HR 1270 IH

1 senger automobile insurer, or any of its affiliate insurers, 

2 to take into consideration any of the factors described in 

3 subsection (b) relating to a consumer in determining that 

4 consumer’s eligibility for automobile insurance or in calcu5 lating the rate for that consumer. 

6 (b) FACTORS.—The factors referred to in subsection 

7 (a) are— 

8 (1) gender; 

9 (2) level of education; 

10 (3) occupation; 

11 (4) employment status; 

12 (5) home ownership status; 

13 (6) zip code or adjacent zip codes; 

14 (7) census tract; 

15 (8) marital status; 

16 (9) credit score or credit-based insurance score; 

17 (10) consumer report; 

18 (11) previous insurer; or 

19 (12) prior purchase of insurance of a consumer 

20 from that automobile insurer. 

21 (c) PUBLIC AVAILABILITY OF INFORMATION.—All 

22 underwriting rules and rate filings for use by any private 

23 passenger automobile insurer shall be available for public 

24 inspection and may not be considered proprietary trade 

25 secret information. 


kjohnson on DSK79L0C42PROD with BILLS
5 

•HR 1270 IH

1 (d) REASONABLE PROCEDURES TO ASSURE COMPLI2 ANCE.—No person shall be held liable for any violation 

3 of this Act if the person shows by a preponderance of the 

4 evidence that at the time of the alleged violation the per5 son maintained reasonable procedures to assure compli6 ance with the provisions of this Act. 

7 (e) RULES OF CONSTRUCTION.— 

8 (1) FACTORS AND METHODS INFLUENCING

9 PREMIUMS.—For the purposes of this Act, a viola10 tion of subsection (a) shall be considered to have oc11 curred whenever the consideration of any of the fac12 tors described in subsection (b) prevents the con13 sumer from obtaining insurance at the lowest rate 

14 available to the consumer from a private passenger 

15 automobile insurer or any of its affiliates. Actions 

16 considered a violation of such subsection include the 

17 usage or consideration of any such factor resulting 

18 in— 

19 (A) the determination of a consumer’s eli20 gibility for automobile insurance or the calcula21 tion of the rate for that consumer; 

22 (B) an action which prevents a consumer 

23 from receiving certain rebates or discounts; 


kjohnson on DSK79L0C42PROD with BILLS
6 

•HR 1270 IH

1 (C) an action which prevents a consumer 

2 from obtaining insurance from an automobile 

3 insurer or any of its affiliate companies; 

4 (D) a denial, cancellation, non-renewal, or 

5 change in policy or coverage terms; or 

6 (E) any other impact on a consumer’s pre7 mium for insurance. 

8 (2) AUTHORITY OF FEDERAL AND STATE AGEN9 CIES.—Nothing in this Act is intended to affect the 

10 authority of any Federal or State agency to enforce 

11 a prohibition against unfair or deceptive acts or 

12 practices, including the making of false or mis13 leading statements in connection with a credit or in14 surance transaction that is not initiated by the con15 sumer. 

16 SEC. 4. ENFORCEMENT. 

17 (a) ENFORCEMENT BY FEDERAL TRADE COMMIS18 SION.— 

19 (1) UNFAIR OR DECEPTIVE ACTS OR PRAC20 TICES.—A violation of this Act shall be treated as 

21 an unfair and deceptive act or practice proscribed 

22 under section 5 of the Federal Trade Commission 

23 Act (15 U.S.C. 57a(a)(1)(B)). 

24 (2) POWERS OF COMMISSION.—The Federal 

25 Trade Commission shall enforce this Act in the same 


kjohnson on DSK79L0C42PROD with BILLS
7 

•HR 1270 IH

1 manner, by the same means, and with the same ju2 risdiction, powers, and duties as though all applica3 ble terms and provisions of the Federal Trade Com4 mission Act (15 U.S.C. 41 et seq.) were incor5 porated into and made a part of this Act. Any per6 son who violates this Act shall be subject to the pen7 alties and entitled to the privileges and immunities 

8 provided in the Federal Trade Commission Act. 

9 (3) AMOUNT OF PENALTY.—Notwithstanding 

10 the penalties set forth in section 5 of such Act, a 

11 person who violates this Act shall be liable for a civil 

12 penalty of not less than $2,500 per violation. 

13 (4) REGULATIONS.—The Federal Trade Com14 mission shall prescribe, in accordance with section 

15 553 of title 5, United States Code, such regulations 

16 as are necessary to carry out the purposes of this 

17 Act, including regulations as may be necessary or 

18 appropriate to administer and carry out the pur19 poses and objectives of this Act, and to prevent eva20 sions thereof or to facilitate compliance therewith. 

21 (b) ACTIONS BY CONSUMERS.— 

22 (1) WILLFUL VIOLATIONS.—Any private pas23 senger automobile insurer who willfully violates this 

24 Act with respect to any consumer is liable to that 

25 consumer in an amount equal to the sum of— 


kjohnson on DSK79L0C42PROD with BILLS
8 

•HR 1270 IH

1 (A) any actual damages sustained by the 

2 consumer as a result of the failure; 

3 (B) such amount of punitive damages as 

4 the court may allow; and 

5 (C) in the case of any successful action to 

6 enforce any liability under this paragraph, the 

7 costs of the action together with reasonable at8 torneys’ fees as determined by the court. 

9 (2) NEGLIGENT VIOLATIONS.—Any private pas10 senger automobile insurer who is negligent in failing 

11 to comply with any requirement imposed under this 

12 Act with respect to any consumer is liable to that 

13 consumer in an amount equal to the sum of— 

14 (A) any actual damages sustained by the 

15 consumer as a result of the failure; and 

16 (B) in the case of any successful action to 

17 enforce any liability under this paragraph, the 

18 costs of the action together with reasonable at19 torneys’ fees as determined by the court. 

20 (3) ATTORNEYS’ FEES.—Upon a finding by the 

21 court that an unsuccessful pleading, motion, or other 

22 paper filed in connection with an action under this 

23 subsection was filed in bad faith or for purposes of 

24 harassment, the court shall award to the prevailing 

25 party attorney’s fees reasonable in relation to the 


kjohnson on DSK79L0C42PROD with BILLS
9 

•HR 1270 IH

1 work expended in responding to the pleading, mo2 tion, or other paper. 

3 (4) JURISDICTION OF COURTS; LIMITATION OF

4 ACTIONS.—An action to enforce any liability created 

5 under this subsection may be brought in any appro6 priate United States district court, without regard to 

7 the amount in controversy, or in any other court of 

8 competent jurisdiction, not later than the earlier 

9 of— 

10 (A) 2 years after the date of discovery by 

11 the plaintiff of the violation that is the basis for 

12 such liability; or 

13 (B) 5 years after the date on which the 

14 violation that is the basis for such liability oc15 curs. 

16 (c) ACTIONS BY STATES.— 

17 (1) IN GENERAL.—In any case in which the at18 torney general of a State, or an official or agency of 

19 a State, has reason to believe that an interest of the 

20 residents of such State has been or is threatened or 

21 adversely affected by an act or practice in violation 

22 of this Act, the State, as parens patriae, may bring 

23 a civil action on behalf of the residents of the State 

24 in an appropriate State court or an appropriate dis25 trict court of the United States to— 


kjohnson on DSK79L0C42PROD with BILLS
10 

•HR 1270 IH

1 (A) enjoin such act or practice; 

2 (B) enforce compliance with this Act; 

3 (C) obtain damages, restitution, or other 

4 compensation on behalf of residents of the 

5 State; or 

6 (D) obtain such other legal and equitable 

7 relief as the court may consider to be appro8 priate. 

9 (2) NOTICE.—Before filing an action under this 

10 subsection, the attorney general, official, or agency 

11 of the State involved shall provide to the Federal 

12 Trade Commission a written notice of such action 

13 and a copy of the complaint for such action. If the 

14 attorney general, official, or agency determines that 

15 it is not feasible to provide the notice described in 

16 this paragraph before the filing of the action, the at17 torney general, official, or agency shall provide writ18 ten notice of the action and a copy of the complaint 

19 to the Federal Trade Commission immediately upon 

20 the filing of the action. 

21 (3) AUTHORITY OF FEDERAL TRADE COMMIS22 SION.—On receiving notice under paragraph (2) of 

23 an action under this subsection, the Federal Trade 

24 Commission shall have the right— 

25 (A) to intervene in the action; 


kjohnson on DSK79L0C42PROD with BILLS
11 

•HR 1270 IH

1 (B) upon so intervening, to be heard on all 

2 matters arising therein; and 

3 (C) to file petitions for appeal. 

4 (4) RULE OF CONSTRUCTION.—For purposes of 

5 bringing a civil action under this subsection, nothing 

6 in this Act shall be construed to prevent an attorney 

7 general, official, or agency of a State from exercising 

8 the powers conferred on the attorney general, offi9 cial, or agency by the laws of such State to conduct 

10 investigations, administer oaths and affirmations, or 

11 compel the attendance of witnesses or the production 

12 of documentary and other evidence. 

13 SEC. 5. RELATION TO STATE LAW. 

14 This Act does not annul, alter, affect, or exempt any 

15 person subject to the provisions of this Act from complying 

16 with the laws of any State with respect to the collection, 

17 distribution, or use of any information on consumers, the 

18 prevention or mitigation of identity theft, or the regulation 

19 of the business of insurance, except to the extent that 

20 those laws are inconsistent with any provision of this Act, 

21 and then only to the extent of the inconsistency. 

22 SEC. 6. DEFINITIONS. 

23 For the purposes of this Act, the following definitions 

24 apply: 


kjohnson on DSK79L0C42PROD with BILLS
12 

•HR 1270 IH

1 (1) AFFILIATE.—The term ‘‘affiliate’’ means an 

2 entity that, directly or indirectly, through one or 

3 more intermediaries, controls, is controlled by, or is 

4 under common control with another entity. For pur5 poses of this paragraph, the term ‘‘control’’ means 

6 the possession, directly or indirectly, of the power to 

7 direct or cause the direction of the management and 

8 policies of the entity, whether— 

9 (A) through the ownership of voting securi10 ties; 

11 (B) by contract other than a commercial 

12 contract for goods or non-management services; 

13 (C) by contract for goods or non-manage14 ment services where the volume of activity re15 sults in a reliance relationship; or 

16 (D) by common management. 

17 Control shall be presumed to exist if an entity and 

18 its affiliates directly or indirectly own, control, hold 

19 with the power to vote, or hold proxies representing 

20 10 percent or more of the voting interests of an enti21 ty. 

22 (2) AUTOMOBILE INSURER.—The term ‘‘auto23 mobile insurer’’ means an insurer authorized to 

24 transact or transacting automobile insurance, motor 

25 vehicle insurance, automobile or motor vehicle liabilVerDate Sep 11 2014 23:04 Mar 20, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H1270.IH H1270

kjohnson on DSK79L0C42PROD with BILLS
13 

•HR 1270 IH

1 ity insurance, or any similar insurance business in 

2 the United States. 

3 (3) CENSUS TRACT.—The term ‘‘census tract’’ 

4 means any small, relatively permanent statistical 

5 subdivision of a county, as used by the United 

6 States Census Bureau. 

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

8 report’’ has the meaning given such term in section 

9 603 of the Fair Credit Reporting Act (15 U.S.C. 

10 1681a), except that such term does not include any 

11 communication to the extent such communication re12 lates to the driving history or place of residence of 

13 a consumer. 

14 (5) CREDIT-BASED INSURANCE SCORE.—The 

15 term ‘‘credit-based insurance score’’ means a rating 

16 based in whole or in part on a consumer’s credit in17 formation used in underwriting and rating of con18 sumers that takes into account certain elements of 

19 an individual’s credit history to predict how likely 

20 such individual is to have an insurance loss. 

21 (6) CREDIT SCORE.—The term ‘‘credit score’’ 

22 has the meaning given such term in section 

23 609(f)(2) of the Fair Credit Reporting Act (15 

24 U.S.C. 1681g(f)(2)). 


kjohnson on DSK79L0C42PROD with BILLS
14 

•HR 1270 IH

1 (7) EMPLOYMENT STATUS.—The term ‘‘employ2 ment status’’ means a consumer’s status as a cur3 rent full-time employee, part-time employee, em4 ployed, unemployed, underemployed, or any other 

5 such designation which indicates a consumer’s work 

6 status. 

7 (8) HOME OWNERSHIP STATUS.—The term 

8 ‘‘home ownership status’’ refers to whether a con9 sumer currently owns any real property which may 

10 be used as a residence. 

11 (9) LEVEL OF EDUCATION.—The term ‘‘level of 

12 education’’ refers to the highest grade level com13 pleted in a secondary school or trade school, a pro14 fessional licensure or certification, or the highest un15 dergraduate or graduate college degree obtained. 

16 Such term does not include the completion of a traf17 fic safety course or scholastic achievement while en18 rolled in a school, college, or university. 

19 (10) OCCUPATION.—The term ‘‘occupation’’ 

20 means a consumer’s current lawful employment posi21 tion in a career or identifiable trade category. 

22 (11) PRIVATE PASSENGER AUTOMOBILE.—The 

23 term ‘‘private passenger automobile’’ means a 4- 

24 wheel motor vehicle, whether owned or leased to an 

25 individual or individuals, and that is of a private 


kjohnson on DSK79L0C42PROD with BILLS
15 

•HR 1270 IH

1 passenger or station wagon type, or that is a motor 

2 vehicle with a pickup body, a delivery sedan, a pas3 senger van, a sports utility vehicle, or a panel truck 

4 or a camper type vehicle, and that— 

5 (A) is not used as a public or livery con6 veyance for passengers; 

7 (B) is not rented to others; 

8 (C) has a gross vehicle weight of less than 

9 15,000 pounds; and 

10 (D) is not primarily used in the course of 

11 an occupation, profession, or business of a per12 son other than farming or ranching. 

13 Such term includes a motor vehicle owned by a farm 

14 family co-partnership or farm family corporation, 

15 which is principally garaged on a farm or ranch and 

16 otherwise meets the definition contained in this 

17 paragraph. 

18 SEC. 7. EFFECTIVE DATE. 

19 This Act shall take effect 1 year after the date of 

20 enactment of this Act. 

Æ 


kjohnson on DSK79L0C42PROD with BILLS