I 

115TH CONGRESS 

2D SESSION H. R. 5502 

To prohibit private passenger automobile insurers from using certain income 

proxies to determine insurance rates and eligibility. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 12, 2018 

Mrs. WATSON COLEMAN 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’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 


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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 


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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, previous insurer, and prior pur15 chase of insurance are significant factors used to de16 termine eligibility for preferred auto insurance rates 

17 regardless of the person’s driving history. As a re18 sult of the individual’s ineligibility for preferred 

19 rates, the driver’s policy and rate will be only offered 

20 from an affiliate company that has higher rates. 

21 SEC. 3. REQUIREMENTS FOR PRIVATE PASSENGER AUTO22 MOBILE INSURERS. 

23 (a) USE OF CERTAIN INCOME PROXIES PROHIB24 ITED.—It is unlawful for a private passenger automobile 

25 insurer, or any of its affiliate insurers, to take into considVerDate Sep 11 2014 20:56 Apr 17, 2018 Jkt 079200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5502.IH H5502

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1 eration the level of education, occupation, employment sta2 tus, home ownership status, credit score, consumer report, 

3 previous insurer, or prior purchase of insurance of a con4 sumer in determining that consumer’s eligibility for auto5 mobile insurance or in calculating the rate for that con6 sumer. 

7 (b) PUBLIC AVAILABILITY OF INFORMATION.—All 

8 underwriting rules and rate filings for use by any private 

9 passenger automobile insurer shall be available for public 

10 inspection and may not be considered proprietary trade 

11 secret information. 

12 (c) REASONABLE PROCEDURES TO ASSURE COMPLI13 ANCE.—No person shall be held liable for any violation 

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

15 evidence that at the time of the alleged violation the per16 son maintained reasonable procedures to assure compli17 ance with the provisions of this Act. 

18 (d) RULES OF CONSTRUCTION.— 

19 (1) FACTORS AND METHODS INFLUENCING

20 PREMIUMS.—For the purposes of this Act, a viola21 tion of subsection (a) shall be considered to have oc22 curred whenever a consumer’s education, occupation, 

23 employment status, home ownership status, credit 

24 score, consumer report, previous insurer, or prior 

25 purchase of insurance prevents the consumer from 


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1 obtaining insurance at the lowest rate available to 

2 the consumer from a private passenger automobile 

3 insurer or any of its affiliates. Actions considered a 

4 violation of such subsection include the usage or 

5 consideration of any such factor resulting in— 

6 (A) the determination of a consumer’s eli7 gibility for automobile insurance or the calcula8 tion of the rate for that consumer; 

9 (B) an action which prevents a consumer 

10 from receiving certain rebates or discounts; 

11 (C) an action which prevents a consumer 

12 from obtaining insurance from an automobile 

13 insurer or any of its affiliate companies; 

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

15 change in policy or coverage terms; or 

16 (E) any other impact on a consumer’s pre17 mium for insurance. 

18 (2) AUTHORITY OF FEDERAL AND STATE AGEN19 CIES.—Nothing in this Act is intended to affect the 

20 authority of any Federal or State agency to enforce 

21 a prohibition against unfair or deceptive acts or 

22 practices, including the making of false or mis23 leading statements in connection with a credit or in24 surance transaction that is not initiated by the con25 sumer. 


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1 SEC. 4. ENFORCEMENT. 

2 (a) ENFORCEMENT BY FEDERAL TRADE COMMIS3 SION.— 

4 (1) UNFAIR OR DECEPTIVE ACTS OR PRAC5 TICES.—A violation of this Act shall be treated as 

6 an unfair and deceptive act or practice proscribed 

7 under section 5 of the Federal Trade Commission 

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

9 (2) POWERS OF COMMISSION.—The Federal 

10 Trade Commission shall enforce this Act in the same 

11 manner, by the same means, and with the same ju12 risdiction, powers, and duties as though all applica13 ble terms and provisions of the Federal Trade Com14 mission Act (15 U.S.C. 41 et seq.) were incor15 porated into and made a part of this Act. Any per16 son who violates this Act shall be subject to the pen17 alties and entitled to the privileges and immunities 

18 provided in the Federal Trade Commission Act. 

19 (3) AMOUNT OF PENALTY.—Notwithstanding 

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

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

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

23 (4) REGULATIONS.—The Federal Trade Com24 mission shall prescribe, in accordance with section 

25 553 of title 5, United States Code, such regulations 

26 as are necessary to carry out the purposes of this 


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1 Act, including regulations as may be necessary or 

2 appropriate to administer and carry out the pur3 poses and objectives of this Act, and to prevent eva4 sions thereof or to facilitate compliance therewith. 

5 (b) ACTIONS BY CONSUMERS.— 

6 (1) WILLFUL VIOLATIONS.—Any private pas7 senger automobile insurer who willfully violates this 

8 Act with respect to any consumer is liable to that 

9 consumer in an amount equal to the sum of— 

10 (A) any actual damages sustained by the 

11 consumer as a result of the failure; 

12 (B) such amount of punitive damages as 

13 the court may allow; and 

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

15 enforce any liability under this paragraph, the 

16 costs of the action together with reasonable at17 torneys’ fees as determined by the court. 

18 (2) NEGLIGENT VIOLATIONS.—Any private pas19 senger automobile insurer who is negligent in failing 

20 to comply with any requirement imposed under this 

21 Act with respect to any consumer is liable to that 

22 consumer in an amount equal to the sum of— 

23 (A) any actual damages sustained by the 

24 consumer as a result of the failure; and 


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

2 enforce any liability under this paragraph, the 

3 costs of the action together with reasonable at4 torneys’ fees as determined by the court. 

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

6 court that an unsuccessful pleading, motion, or other 

7 paper filed in connection with an action under this 

8 subsection was filed in bad faith or for purposes of 

9 harassment, the court shall award to the prevailing 

10 party attorney’s fees reasonable in relation to the 

11 work expended in responding to the pleading, mo12 tion, or other paper. 

13 (4) JURISDICTION OF COURTS; LIMITATION OF

14 ACTIONS.—An action to enforce any liability created 

15 under this subsection may be brought in any appro16 priate United States district court, without regard to 

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

18 competent jurisdiction, not later than the earlier 

19 of— 

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

21 the plaintiff of the violation that is the basis for 

22 such liability; or 

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

24 violation that is the basis for such liability oc25 curs. 


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1 (c) ACTIONS BY STATES.— 

2 (1) IN GENERAL.—In any case in which the at3 torney general of a State, or an official or agency of 

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

5 residents of such State has been or is threatened or 

6 adversely affected by an act or practice in violation 

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

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

9 in an appropriate State court or an appropriate dis10 trict court of the United States to— 

11 (A) enjoin such act or practice; 

12 (B) enforce compliance with this Act; 

13 (C) obtain damages, restitution, or other 

14 compensation on behalf of residents of the 

15 State; or 

16 (D) obtain such other legal and equitable 

17 relief as the court may consider to be appro18 priate. 

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

20 subsection, the attorney general, official, or agency 

21 of the State involved shall provide to the Federal 

22 Trade Commission a written notice of such action 

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

24 attorney general, official, or agency determines that 

25 it is not feasible to provide the notice described in 


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1 this paragraph before the filing of the action, the at2 torney general, official, or agency shall provide writ3 ten notice of the action and a copy of the complaint 

4 to the Federal Trade Commission immediately upon 

5 the filing of the action. 

6 (3) AUTHORITY OF FEDERAL TRADE COMMIS7 SION.—On receiving notice under paragraph (2) of 

8 an action under this subsection, the Federal Trade 

9 Commission shall have the right— 

10 (A) to intervene in the action; 

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

12 matters arising therein; and 

13 (C) to file petitions for appeal. 

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

15 bringing a civil action under this subsection, nothing 

16 in this Act shall be construed to prevent an attorney 

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

18 the powers conferred on the attorney general, offi19 cial, or agency by the laws of such State to conduct 

20 investigations, administer oaths and affirmations, or 

21 compel the attendance of witnesses or the production 

22 of documentary and other evidence. 

23 SEC. 5. RELATION TO STATE LAW. 

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

25 person subject to the provisions of this Act from complying 


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

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

3 prevention or mitigation of identity theft, or the regulation 

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

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

6 and then only to the extent of the inconsistency. 

7 SEC. 6. DEFINITIONS. 

8 For the purposes of this Act, the following definitions 

9 apply: 

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

11 entity that, directly or indirectly, through one or 

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

13 under common control with another entity. For pur14 poses of this paragraph, the term ‘‘control’’ means 

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

16 direct or cause the direction of the management and 

17 policies of the entity, whether— 

18 (A) through the ownership of voting securi19 ties; 

20 (B) by contract other than a commercial 

21 contract for goods or non-management services; 

22 (C) by contract for goods or non-manage23 ment services where the volume of activity re24 sults in a reliance relationship; or 

25 (D) by common management. 


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1 Control shall be presumed to exist if an entity and 

2 its affiliates directly or indirectly own, control, hold 

3 with the power to vote, or hold proxies representing 

4 10 percent or more of the voting interests of an enti5 ty. 

6 (2) AUTOMOBILE INSURER.—The term ‘‘auto7 mobile insurer’’ means an insurer authorized to 

8 transact or transacting automobile insurance, motor 

9 vehicle insurance, automobile or motor vehicle liabil10 ity insurance, or any similar insurance business in 

11 the United States. 

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

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

14 603 of the Fair Credit Reporting Act (15 U.S.C. 

15 1681a), except that such term does not include any 

16 communication to the extent such communication re17 lates to the driving history or place of residence of 

18 a consumer. 

19 (4) CREDIT SCORE.—The term ‘‘credit score’’ 

20 has the meaning given such term in section 

21 609(f)(2) of the Fair Credit Reporting Act (15 

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

23 (5) EMPLOYMENT STATUS.—The term ‘‘employ24 ment status’’ means a consumer’s status as a cur25 rent full-time employee, part-time employee, emVerDate Sep 11 2014 20:56 Apr 17, 2018 Jkt 079200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H5502.IH H5502

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1 ployed, unemployed, underemployed, or any other 

2 such designation which indicates a consumer’s work 

3 status. 

4 (6) HOME OWNERSHIP STATUS.—The term 

5 ‘‘home ownership status’’ refers to whether a con6 sumer currently owns any real property which may 

7 be used as a residence. 

8 (7) LEVEL OF EDUCATION.—The term ‘‘level of 

9 education’’ refers to the highest grade level com10 pleted in a secondary school or trade school, a pro11 fessional licensure or certification, or the highest un12 dergraduate or graduate college degree obtained. 

13 Such term does not include the completion of a traf14 fic safety course or scholastic achievement while en15 rolled in a school, college, or university. 

16 (8) OCCUPATION.—The term ‘‘occupation’’ 

17 means a consumer’s current lawful employment posi18 tion in a career or identifiable trade category. 

19 (9) PRIVATE PASSENGER AUTOMOBILE.—The 

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

21 wheel motor vehicle, whether owned or leased to an 

22 individual or individuals, and that is of a private 

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

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1 senger van, a sports utility vehicle, or a panel truck 

2 or a camper type vehicle, and that— 

3 (A) is not used as a public or livery con4 veyance for passengers; 

5 (B) is not rented to others; 

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

7 15,000 pounds; and 

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

9 an occupation, profession, or business of a per10 son other than farming or ranching. 

11 Such term includes a motor vehicle owned by a farm 

12 family co-partnership or farm family corporation, 

13 which is principally garaged on a farm or ranch and 

14 otherwise meets the definition contained in this 

15 paragraph. 

16 SEC. 7. EFFECTIVE DATE. 

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

18 enactment of this Act. 

Æ 


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