I

103D CONGRESS

1ST SESSION H. R. 2753

To provide for public access to information regarding the availability of

insurance, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JULY 27, 1993

Mr. FOGLIETTA introduced the following bill; which was referred jointly to the

Committees on Banking, Finance and Urban Affairs and Energy and

Commerce

A BILL

To provide for public access to information regarding the

availability of insurance, and for other purposes.

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 ‘‘Insurance Anti-Redlin5 ing Act of 1993’’.

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
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1 between areas of different incomes and racial com2 position;

3 (2) such disparities adversely affect the afford4 ability and availability of insurance for consumers;

5 (3) the lack of affordable and adequate insur6 ance for qualified consumers severely limits the abil7 ity of such consumers to obtain credit for home,

8 business, and automobile purchases; and

9 (4) disclosures of insurance activities of insur10 ers would benefit consumers and insurance regu11 lators without imposing any undue burden on insur12 ers.

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

14 to, nor shall it be construed to, encourage unsound under15 writing practices.

16 SEC. 3. MAINTENANCE OF INFORMATION AND PUBLIC DIS17 CLOSURE.

18 (a) DESIGNATED INSURERS.—Except as provided in

19 section 4(e), each insurer designated under section

20 7(a)(2), which sells a line of insurance designated under

21 section 7(a)(3) in a Metropolitan Statistical Area or Con22 solidated Metropolitan Statistical Area (both hereafter in

23 this Act referred to as an ‘‘MSA’’) designated by the Di24 rector of the Office of Management and Budget, shall

25 compile and make available for each calendar year to the
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1 Secretary of Commerce (in accordance with section 6 and

2 regulations of the Secretary) and to the public for inspec3 tion and copying at the home office or at a central deposi4 tory established under section 5 and at least one branch

5 office (if there is one) within such MSA—

6 (1) the number and total coverage amount of

7 insurance policies by designated line which were is8 sued in such MSA;

9 (2) the number and total coverage amount of

10 insurance policies by designated line for which the

11 insurer received a completed application in such

12 MSA;

13 (3) the number and total coverage amount of

14 insurance policies by designated line for which the

15 insurer received a completed application and which

16 were not issued, in such MSA;

17 (4) the number and total coverage amount of

18 insurance policies by designated line which were re19 newed in such MSA;

20 (5) the number and total coverage amount of

21 insurance policies by designated line for which the

22 insurer received a completed application for renewal

23 in such MSA;

24 (6) the number and total coverage amount of

25 insurance policies by designated line for which the
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1 insurer received a completed application for renewal

2 and which were not renewed, in such MSA;

3 (7) the number and total coverage amount of

4 insurance policies by designated line which were can5 celed by the insurer, in such MSA;

6 (8) the number of agents of such insurer whose

7 principal place of business is located in such MSA

8 and the number within each census tract or county,

9 as applicable, in such MSA and with respect to each

10 such agent, whether such agent is an employee,

11 independent contractor working exclusively for such

12 insurer, or an independent contractor appointed to

13 represent such insurer on a nonexclusive basis;

14 (9) the number of agents of such insurer whose

15 principal place of business was located in such MSA

16 but which was relocated outside such MSA or whose

17 agency was terminated, and the number of such

18 agents for each census tract or county, as applicable,

19 in such MSA; and

20 (10) the number of agents of such insurer

21 whose principal place of business was established at

22 a location in such MSA and the number of such

23 agents for each census tract or county, as applicable,

24 in such MSA.
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1 (b) NONDESIGNATED INSURERS.—Except as pro2 vided in section 4(e), each insurer which sells an insurance

3 policy in a designated line of insurance in an MSA and

4 which is not a designated insurer in such MSA shall report

5 for each calendar year to the Secretary (in accordance

6 with section 6 and regulations of the Secretary) the num7 ber of insurance policies in a designated line sold in such

8 MSA on an annualized basis which adjusts for varying du9 rations of insurance policies sold—

10 (1) itemized by census tract for policies sold

11 within any county with a population of more than

12 30,000 within the MSA; or

13 (2) by county for insurance policies sold within

14 any other county in such MSA.

15 Such information shall be made available to the public on

16 a timetable determined by the Secretary but not later than

17 September 1 of the calendar year following the calendar

18 year for which the information is required to be reported.

19 SEC. 4. REQUIREMENTS.

20 (a) CONTENT.—The information required to be main21 tained and made available under section 3(a) shall—

22 (1) be itemized in order to clearly and conspicu23 ously disclose the number and coverage amount for

24 each line of insurance for which information is re25 quired by—
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1 (A) census tracts for insurance policies

2 within any county with a population of more

3 than 30,000 within the MSA; or

4 (B) county for insurance policies within

5 any other county within such MSA;

6 (2) disclose for each designated line of insur7 ance in an MSA and, with respect to each such line,

8 for each census tract or county, as applicable, in the

9 MSA—

10 (A) the total number of claims made which

11 with respect to property insurance shall be

12 disaggregated by the type and use of the prop13 erty insured, which types and uses shall in14 clude—

15 (i) properties consisting of 1 to 4

16 dwelling units;

17 (ii) properties consisting of more than

18 4 dwelling units;

19 (iii) owner-occupied properties;

20 (iv) rental properties; and

21 (v) vacant properties; and

22 (B) the total amount paid in claims which

23 with respect to property insurance shall be

24 disaggregated by the type and use of the prop25 erty insured, which types and uses shall include
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1 the types and uses described in clauses (i)

2 through (v) of subparagraph (A);

3 (3) disclose the standards and criteria used in

4 underwriting each designated line of insurance; and

5 (4) be made available to the public on a time6 table determined by the Secretary but not later than

7 September 1 of the calendar year following the cal8 endar year for which the information is required to

9 be made available.

10 (b) ITEMIZATION OF DATA.—With respect to insur11 ance and applications for which information is required

12 to be maintained and made available under section 3(a),

13 the following information shall be maintained and made

14 available for each policy and each completed application:

15 (1) The MSA for which such insurance is is16 sued or applied and within such MSA the census

17 tract or county, as applicable, for which such insur18 ance is issued or requested.

19 (2) The designated insurer who issued such in20 surance or to whom the application was made.

21 (3) The date of the issuance of such insurance.

22 (4) The line of the insurance which is des23 ignated and any subline or class of such insurance.
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1 (5) The type of insurance or policy form for

2 which applications are made and the types of insur3 ance and policy forms which are issued.

4 (6) The amount of coverage provided under

5 such insurance and any applicable deductibles.

6 (7) The amount of the premiums for such in7 surance.

8 (8) The durations of such insurance.

9 (9) The racial characteristics and gender of the

10 applicants for such insurance.

11 (10) A notation if such insurance was issued in

12 a voluntary or residual market.

13 (11) The date of, and reason for, any declina14 tion, cancellation, or nonrenewal made for such in15 surance.

16 (12) With respect to property insurance, the

17 market value of the property insured and the type

18 and use of property insured.

19 (c) PERIOD OF MAINTENANCE.—Any information re20 quired to be compiled and made available under section

21 3 shall be maintained and made available for a period of

22 5 years after the close of the first year during which such

23 information is required to be maintained and made avail24 able.
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1 (d) FORMAT FOR DISCLOSURES.—Subject to section

2 5, the Secretary shall prescribe a standard format for

3 making information available as required by section 3.

4 Such format shall encourage the submission of informa5 tion in a form readable by a computer.

6 (e) EXEMPTIONS.—

7 (1) SECRETARIAL ACTION.—The Secretary may

8 by regulation exempt from the requirements of sec9 tion 3 any insurer within any State if the Secretary

10 determines that under the laws of such State that

11 such insurer is subject to disclosure requirements on

12 a census tract basis substantially similar to those of

13 section 3 and that such law contains adequate provi14 sions for enforcement.

15 (2) UNITED STATES PROGRAM.—Reporting

16 shall not be required under section 3 with respect to

17 insurance provided by a program underwritten or

18 administered by the United States, including the na19 tional flood insurance program under the National

20 Flood Insurance Act of 1968, the program for insur21 ance against burglary and theft under title XII of

22 the National Housing Act, and mortgage insurance

23 under the National Housing Act.
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1 (f) COMPLETED APPLICATION.—For purposes of sec2 tion 3 and this section, the Secretary shall define ‘‘com3 pleted applications’’ to—

4 (1) ensure that the disclosure required by such

5 sections appropriately reflects the characteristics of

6 the applicants interested in purchasing insurance in

7 an MSA; and

8 (2) prevent insurers from evading the intent of

9 such sections through practices designed to discour10 age applicants from completing applications.

11 SEC. 5. ACCESS SYSTEM.

12 (a) IN GENERAL.—The Secretary shall implement a

13 system to facilitate access to information required to be

14 maintained and made available under section 3. Such sys15 tem shall also include arrangements for a publicly acces16 sible central depository of information in each MSA, as

17 provided under subsection (b), and for a telephone number

18 which can be used by the public, at cost, to request such

19 information. Written statements containing such informa20 tion shall be made available to the public for inspection

21 and copying at such central depository of information for

22 all designated insurers within such MSA. The Secretary

23 shall make copies of such statements available in forms

24 readable by widely used personal computers. The Sec25 retary may charge a fee for such information, which may
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1 not exceed the amount, determined by the Secretary, that

2 is equal to the cost of producing the computer statements.

3 (b) USE OF HOME MORTGAGE DISCLOSURE ACT DE4 POSITORIES.—To the extent practicable, the central de5 positories referred to in subsection (a) shall be the central

6 depositories established under section 304(f) of the Home

7 Mortgage Disclosure Act of 1975. The Federal Financial

8 Institutions Examination Council shall consult with the

9 Secretary regarding the use of such depositories and shall

10 provide for the use of such depositories to the extent

11 agreed to by such Council and the Secretary.

12 SEC. 6. SUBMISSION TO SECRETARY.

13 The information referred to in section 3 shall be sub14 mitted to the Secretary. The Secretary shall develop regu15 lations prescribing—

16 (1) the format for making such information

17 available;

18 (2) the method for submission of such informa19 tion; and

20 (3) the procedures for making the information

21 available to the public.

22 Any reporting insurer may submit in writing to the Sec23 retary such additional data or explanations as it deems

24 relevant to the decision by such insurer to sell insurance.
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1 SEC. 7. DESIGNATIONS.

2 (a) DESIGNATIONS BY THE SECRETARY.—

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

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

5 which reporting is required under section 3. At a

6 minimum, the Secretary shall designate the 150

7 MSA’s having the largest population. The Secretary

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

9 criteria as the Secretary may by rule develop. Such

10 a rule shall be issued in accordance with section 553

11 of title 5, United States Code.

12 (2) DESIGNATION OF INSURERS.—For each

13 MSA designated under paragraph (1), the Secretary

14 shall take the following actions:

15 (A) The Secretary shall annually designate

16 the insurers transacting insurance business in

17 such MSA for which reporting is required under

18 section 3. At a minimum, the Secretary shall

19 annually designate the 25 insurers in such MSA

20 having the largest premium volume in the

21 designated lines of insurance.

22 (B) The Secretary shall also annually des23 ignate any entity providing insurance in a des24 ignated line of insurance as part of a residual

25 market established by State law.
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1 (C) The Secretary may designate addi2 tional insurers on the basis of such criteria as

3 the Secretary may by rule develop. Such a rule

4 shall be issued in accordance with section 553

5 of title 5, United States Code. In considering

6 whether to designate additional insurers, the

7 Secretary shall ensure that—

8 (i) insurers who specialize in selling

9 insurance in urban areas, including surplus

10 lines insurers, are specifically considered

11 for designation notwithstanding their pre12 mium volume; and

13 (ii) that insurers representing at least

14 90 percent of the premium volume in

15 the designated lines of insurance are

16 designated in such MSA.

17 (3) DESIGNATION OF LINES OF INSURANCE.—

18 For each MSA designated under paragraph (1) the

19 Secretary shall designate the lines of property and

20 casualty insurance sold in such MSA for which re21 porting is required under section 3. At a minimum,

22 the Secretary shall annually designate—

23 (A) private passenger automobile insurance

24 (including appropriate sublines and classes);
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1 (B) property insurance which does not

2 cover commercial property (including appro3 priate sublines and classes and related cov4 erages such as coverage of property contents

5 and property insured at cash value); and

6 (C) commercial insurance for small busi7 ness.

8 The Secretary may designate additional lines of in9 surance on the basis of such criteria as the Sec10 retary may by rule develop. Such a rule shall be

11 issued in accordance with section 553 of title 5,

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

13 designation of a line of insurance includes a designa14 tion of a subline or class of insurance.

15 (4) TIMING OF DESIGNATIONS.—The Secretary

16 shall make the annual designations required by

17 paragraphs (1), (2), and (3) no later than Septem18 ber 1 of the year preceding the year for which re19 porting is required under section 3. The Secretary

20 shall notify persons involved in the designations no

21 later than the October 1 which follows the designa22 tion.

23 (b) OBTAINING INFORMATION.—The Secretary may

24 obtain from insurers such information as the Secretary

25 may require to make designations under subsection (a).
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1 SEC. 8. DISCLOSURES TO REJECTED APPLICANTS.

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

3 (e), the Secretary shall, by regulations issued under sec4 tion 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 In20 surance 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, including the national flood insurance program

7 under the National Flood Insurance Act of 1968, the pro8 gram for insurance against burglary and theft under title

9 XII of the National Housing Act, and mortgage insurance

10 under the National Housing Act.

11 (f) DEFINITION.—For purposes of subsection

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

13 the following actions with respect to insurance trans14 actions involving insurance coverage which is individually

15 underwritten:

16 (1) A declination of insurance coverage.

17 (2) A termination of insurance coverage.

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

19 coverage with a specific insurance entity which the

20 agent represents and which is requested by the ap21 plicant.

22 (4) In the case of property or casualty insur23 ance coverage—

24 (A) placement by an insurance entity or

25 agent of a risk with a residual market mecha-
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1 nism, an unauthorized insurer, or an insurance

2 entity which specializes in substandard risks; or

3 (B) the charging of higher rates on the

4 basis of information which differs from that

5 which the applicant or policyholder furnished.

6 SEC. 9. TERMINATION OF AGENTS.

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

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

9 553 of title 5, United States Code, ensure that the prac10 tices of insurers in terminating agents who handle private

11 mortgage insurance or property or casualty insurance do

12 not result in an inappropriate effect on the availability or

13 affordability of insurance from such insurers. Such regula14 tions shall specifically ensure that such practices do not

15 result in unfair discrimination against agents as a result

16 of their geographic locations or of the geographic locations

17 of their clients. Regulations under this subsection shall be

18 stated in terms of minimum standards.

19 (b) PREEMPTION.—Subsection (a) may not be con20 strued to preempt any State from imposing on insurers

21 requirements of the type stated in such subsection, includ22 ing requirements which are more stringent or more com23 prehensive.

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

25 the States the enforcement of such regulations.
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1 (d) EXEMPTION.—A regulation issued under sub2 section (a) may not apply to insurance provided under a

3 program underwritten or administered by the United

4 States, including the national flood insurance program

5 under the National Flood Insurance Act of 1968, the pro6 gram for insurance against burglary and theft under title

7 XII of the National Housing Act, and mortgage insurance

8 under the National Housing Act.

9 SEC. 10. IMPLEMENTATION.

10 (a) IN GENERAL.—The Secretary shall prescribe

11 such regulations as may be necessary to carry out sections

12 3 through 6. Such regulations may contain such classifica13 tions, differentiations, or other provisions, and may pro14 vide for such adjustments and exceptions for any class of

15 transactions, as in the judgment of the Secretary are nec16 essary and proper to effectuate the purposes of such sec17 tion and to prevent circumvention or evasion thereof or

18 to facilitate compliance therewith.

19 (b) BURDENS.—In prescribing regulations under sub20 section (a), the Secretary shall take into consideration the

21 administrative, paperwork, and other burdens on insur22 ance agents, including independent insurance agents, in23 volved in complying with the requirements of sections 3

24 through 6 and shall minimize the burdens imposed by such

25 requirements with respect to such agents.
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1 SEC. 11. IMPROVED METHODS.

2 The Secretary shall develop, or assist in the improve3 ment of, methods of matching addresses and census tracts

4 to facilitate compliance by insurers, in as economical a

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

6 SEC. 12. COMPILATION OF AGGREGATE DATA.

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

8 shall compile each year, for each MSA, aggregate data by

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

10 or who are exempt from section 3 under the provisions

11 of section 4(e)(1) of such section. The Secretary shall also

12 produce tables indicating, for each MSA, aggregate insur13 ance underwriting patterns for various categories of cen14 sus tracts grouped according to location, age of property,

15 income level, and racial characteristics.

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

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

18 be made available to the public on a timetable determined

19 by the Secretary but not later than December 1 of the

20 year following the calendar year on which the data and

21 tables are based. The data shall be made available using

22 the system implemented under section 5, in the forms re23 quired under such section, and subject to the provisions

24 of such section.
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1 SEC. 13. TESTERS.

2 The Secretary may utilize employees and officers of

3 the Department of Commerce and may provide advice and

4 technical assistance to State and local government agen5 cies and public and private entities (including nonprofit

6 organizations), to develop, implement, carry out, or coordi7 nate programs or activities designed to—

8 (1) prevent or eliminate discriminatory insur9 ance practices; or

10 (2) obtain enforcement of Federal and State

11 laws prohibiting discriminatory insurance practices.

12 SEC. 14. ENFORCEMENT.

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

14 comply with the requirements of sections 3 through 6, or

15 a regulation issued under section 8 or 9, shall be subject

16 to a civil penalty of not to exceed $5,000 for each day

17 during which such violation continues.

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

19 States shall have jurisdiction over a petition of the Sec20 retary to enjoin an insurer from actions which are in viola21 tion of the requirements of sections 3 through 6 or of a

22 regulation issued under section 8 or 9.

23 SEC. 15. RELATION TO STATE LAWS.

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

25 obligation of any insurer subject to this Act to comply with
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1 the laws of any State or subdivision thereof with respect

2 to public disclosure and recordkeeping.

3 SEC. 16. DEFINITIONS.

4 For purposes of this Act:

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

6 any line of property and casualty insurance, except

7 private passenger automobile and homeowner’s in8 surance.

9 (2) The term ‘‘designated insurer’’ means an

10 insured designated by the Secretary under section

11 7(a)(2).

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

13 insurance designated by the Secretary under section

14 7(a)(3).

15 (4) The term ‘‘insurer’’ means any corporation,

16 association, society, order, firm, company, partner17 ship, individual, or aggregation of individuals which

18 is subject to examination or supervision by any State

19 insurance regulator, or which is doing or represents

20 an insurance business.

21 (5) The term ‘‘private mortgage insurance’’

22 means insurance against the nonpayment of, or de23 fault on, a mortgage or loan for residential or com24 mercial property, except that such term does not in-
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1 clude mortgage insurance made available under the

2 National Housing Act.

3 (6) The term ‘‘property and casualty insur4 ance’’ means insurance against loss of or damage to

5 property, insurance against loss of income or extra

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

7 property, and insurance against third party liability

8 claims caused by negligence or imposed by statute or

9 contract.

10 (7) The term ‘‘residual market’’ means an as11 signed risk plan, joint underwriting association, or

12 any similar mechanism designed to make insurance

13 available to those unable to obtain it in the vol14 untary market.

15 (8) The term ‘‘Secretary’’ means the Secretary

16 of Commerce.

17 (9) The term ‘‘State’’ means any State, the

18 District of Columbia, the Commonwealth of Puerto

19 Rico, the Northern Mariana Islands, the Virgin Is20 lands, American Samoa, and the Trust Territory of

21 the Pacific Islands.

22 SEC. 17. EFFECTIVE DATE.

23 The requirements of this Act shall take effect with

24 respect to calendar year 1994.
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