72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 1703
Senate Bill 280
Sponsored by Senator METSGER
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Establishes requirements for use of credit history in personal
insurance underwriting and rating. Requires Director of
Department of Consumer and Business Services to report to
Seventy-third Legislative Assembly on use of credit history for
personal insurance.
A BILL FOR AN ACT
Relating to use of credit history for personal insurance;
creating new provisions; and amending ORS 746.600 and 746.650.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 746.600 is amended to read:
746.600. As used in ORS 746.600 to 746.690 { - and
750.055 - } :
(1) { + (a) + } 'Adverse underwriting decision' means { - ,
except as provided in subsection (2) of this section, - } any of
the following actions with respect to insurance transactions
involving insurance coverage { - which - } { + that + } is
individually underwritten:
{ - (a) - } { + (A) + } A declination of insurance
coverage.
{ - (b) - } { + (B) + } A termination of insurance
coverage.
{ - (c) - } { + (C) + } Failure of an agent to apply for
insurance coverage with a specific insurer { - which - }
{ + that + } the agent represents and
{ - which - } { + that + } is requested by an applicant.
{ - (d) - } { + (D) + } In the case of life or health
insurance coverage, an offer to insure at higher than standard
rates.
{ - (e) - } { + (E) + } In the case of other kinds of
insurance coverage:
{ - (A) - } { + (i) + } Placement by an insurer or agent of
a risk with a residual market mechanism, an unauthorized insurer
or an insurer
{ - which - } { + that + } specializes in substandard risks.
{ - (B) - } { + (ii) + } The charging of a higher rate on
the basis of information { - which - } { + that + } differs
from that which the applicant or policyholder furnished.
{ + (iii) An increase in any charge for any personal
insurance. + }
{ - (2) - } { + (b) + } 'Adverse underwriting decision'
does not
{ - include - } { + mean any of + } the following actions,
but the insurer or agent responsible for the occurrence of the
action { - shall - } { + must + } nevertheless provide the
applicant or policyholder with the specific reason or reasons for
the occurrence:
{ - (a) - } { + (A) + } The termination of an individual
policy form on a class or statewide basis.
{ - (b) - } { + (B) + } A declination of insurance coverage
solely because the coverage is not available on a class or
statewide basis.
{ - (c) - } { + (C) + } The rescission of a policy.
{ - (3) - } { + (2) + } 'Affiliate of' a specified person
or 'person affiliated with' a specified person means a person who
directly, or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control with,
the person specified.
{ - (4) - } { + (3) + } 'Agent' means a person licensed by
the Director of the Department of Consumer and Business Services
as a resident or nonresident insurance agent.
{ - (5) - } { + (4) + } 'Applicant' means a person who
seeks to contract for insurance coverage, other than a person
seeking group insurance coverage { - which - } { + that + }
is not individually underwritten.
{ + (5) 'Consumer' means an individual, or the individual's
representative, who seeks to obtain, obtains or has obtained a
personal insurance product or service from a licensee, and about
whom the licensee has personal information. + }
(6) 'Consumer report' means any written, oral or other
communication of information bearing on a natural person's
creditworthiness, credit standing, credit capacity, character,
general reputation, personal characteristics or mode of living
{ - which - } { + that + } is used or expected to be used in
connection with an insurance transaction.
(7) 'Consumer reporting agency' means a person { - who - }
{ + that + }:
(a) Regularly engages, in whole or in part, in assembling or
preparing consumer reports for a monetary fee;
(b) Obtains information primarily from sources other than
insurers; and
(c) Furnishes consumer reports to other persons.
(8) 'Control' means, and the terms 'controlled by' or ' under
common control with' refer to, the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a person, whether through the
ownership of voting securities, by contract other than a
commercial contract for goods or nonmanagement services, or
otherwise, unless the power of the person is the result of a
corporate office held in, or an official position held with, the
controlled person.
{ + (9) 'Credit history' means any written or other
communication of any information by a consumer reporting agency
that:
(a) Bears on a consumer's creditworthiness, credit standing or
credit capacity; and
(b) Is used or expected to be used, or collected in whole or in
part, to serve as a factor in determining eligibility for
personal insurance.
(10) 'Customer' means a consumer who has a continuing
relationship with a licensee under which the licensee provides
one or more personal insurance products or services to the
consumer. + }
{ - (9) - } { + (11) + } 'Declination of insurance
coverage' { + or 'decline coverage' + } means a denial, in whole
or in part, by an insurer or agent of requested insurance
coverage.
{ - (10) - } { + (12) + } 'Individual' { + means + }
{ - : - }
{ - (a) Means, for purposes of ORS 746.600 to 746.690 and
750.055, except as provided in paragraph (b) of this
subsection, - } a natural person who:
{ - (A) - } { + (a) + } In the case of life or health
insurance, is a past, present or proposed principal insured or
certificate holder;
{ - (B) - } { + (b) + } In the case of other kinds of
insurance, is a past, present or proposed named insured or
certificate holder;
{ - (C) - } { + (c) + } Is a past, present or proposed
policyowner;
{ - (D) - } { + (d) + } Is a past or present applicant;
{ - (E) - } { + (e) + } Is a past or present claimant; or
{ - (F) - } { + (f) + } Derived, derives or is proposed to
derive insurance coverage under an insurance policy or
certificate { - which - } { + that + } is subject to ORS
746.600 to 746.690 { - and 750.055 - } .
{ - (b) Comprises, for purposes of ORS 746.620, 746.630 and
746.665, and for purposes of terms defined in this section as
those terms are used in ORS 746.620, 746.630 and 746.665, the
following categories of natural persons: - }
{ - (A) 'Consumer,' which means an individual, or the
individual's representative, who seeks to obtain, obtains or has
obtained an insurance product or service from a licensee that is
to be used primarily for personal, family or household purposes,
and about whom the licensee has personal information. - }
{ - (B) 'Customer,' which means a consumer who has a
continuing relationship with a licensee under which the licensee
provides one or more insurance products or services to the
consumer that are to be used primarily for personal, family or
household purposes. - }
{ - (11) - } { + (13) + } 'Institutional source' means a
person or governmental entity { - which - } { + that + }
provides information about an individual to an insurer, agent or
insurance-support organization, other than:
(a) An agent;
(b) The individual who is the subject of the information; or
(c) A natural person acting in a personal capacity rather than
in a business or professional capacity.
{ + (14) 'Insurance score' means a number or rating that is
derived from an algorithm, computer application, model or other
process that is based in whole or in part on credit history. + }
{ - (12) - } { + (15)(a) + } ' Insurance-support
organization' means { - , except as provided in subsection (13)
of this section, - } a person who regularly engages, in whole or
in part, in assembling or collecting information about natural
persons for the primary purpose of providing the information to
an insurer or agent for insurance transactions, including:
{ - (a) - } { + (A) + } The furnishing of consumer reports
to an insurer or agent for use in connection with insurance
transactions; and
{ - (b) - } { + (B) + } The collection of personal
information from insurers, agents or other insurance-support
organizations for the purpose of detecting or preventing fraud,
material misrepresentation or material nondisclosure in
connection with insurance underwriting or insurance claim
activity.
{ - (13) - } { + (b) + } 'Insurance-support organization'
does not include insurers, agents, governmental institutions,
medical care institutions or medical professionals.
{ - (14) - } { + (16) + } 'Insurance transaction' means any
transaction
{ - involving - } { + that involves + } insurance primarily
for personal, family or household needs rather than business or
professional needs and
{ - which - } { + that + } entails:
(a) The determination of an individual's eligibility for an
insurance coverage, benefit or payment; or
(b) The servicing of an insurance application, policy or
certificate.
{ - (15) - } { + (17) + } { - ' Insurer,' as defined in
ORS 731.106, includes every person engaged in the business of
entering into policies of insurance - } { + 'Insurer' has the
meaning given that term in ORS 731.106 + }.
{ - (16) - } { + (18) + } 'Investigative consumer report'
means a consumer report, or portion of a consumer report, for
which information about a natural person's character, general
reputation, personal characteristics or mode of living is
obtained through personal interviews with the person's neighbors,
friends, associates, acquaintances or others who may have
knowledge concerning such items of information.
{ - (17) - } { + (19) + } 'Licensee' means an insurer,
agent or other person authorized or required to be authorized, or
licensed or required to be licensed, pursuant to the Insurance
Code.
{ - (18) - } { + (20) + } 'Medical care institution' means
a facility or institution { - which - } { + that + } is
licensed to provide health care services to natural persons, and
includes but is not limited to health maintenance organizations,
home health agencies, hospitals, medical clinics, public health
agencies, rehabilitation agencies and skilled nursing facilities.
{ - (19) - } { + (21) + } 'Medical professional' means a
person licensed or certified to provide health care services to
natural persons, and includes but is not limited to
chiropractors, clinical dieticians, clinical psychologists,
dentists, naturopaths, nurses, occupational therapists,
optometrists, pharmacists, physical therapists, physicians,
podiatrists, psychiatric social workers and speech therapists.
{ - (20) - } { + (22) + } 'Medical record information'
means personal information except age or gender, whether oral or
recorded in any form or medium, created by or derived from a
health care provider or the consumer that relates to:
(a) The past, present or future physical, mental or behavioral
health or condition of an individual;
(b) The provision of health care to an individual; or
(c) Payment for the provision of health care to an individual.
{ - (21) - } { + (23) + } 'Nonaffiliated third party' means
any person except:
(a) An affiliate of a licensee;
(b) A person that is employed jointly by a licensee and by a
person that is not an affiliate of the licensee; and
(c) As designated by the director by rule.
{ - (22) - } { + (24) + } 'Personal information' means
information
{ - which - } { + that + } is identifiable with an
individual, { - which - } { + that + } is gathered in
connection with an insurance transaction and from which
information judgments can be made about the individual's
character, habits, avocations, finances, occupations, general
reputation, credit, health or any other personal characteristics.
' Personal information' includes an individual's name and
address, an individual's policy number or similar form of access
code for the individual's policy and 'medical record information'
but does not include 'privileged information ' except for
privileged information { - which - } { + that + } has been
disclosed in violation of ORS 746.665. 'Personal information'
does not include information that a licensee has a reasonable
basis to believe is lawfully made available to the general public
from federal, state or local government records, widely
distributed media or disclosures to the public that are required
by federal, state or local law.
{ + (25) 'Personal insurance' means personal lines of
property and casualty insurance used primarily for personal,
family or household purposes. + }
{ - (23) - } { + (26) + } 'Policyholder' means a person
who:
(a) In the case of individual policies of life or health
insurance, is a current policyowner;
(b) In the case of individual policies of other kinds of
insurance, is currently a named insured; or
(c) In the case of group policies of insurance under which
coverage is individually underwritten, is a current certificate
holder.
{ - (24) - } { + (27) + } 'Pretext interview' means an
interview wherein the interviewer, in an attempt to obtain
information about a natural person, does one or more of the
following:
(a) Pretends to be someone the interviewer is not.
(b) Pretends to represent a person the interviewer is not in
fact representing.
(c) Misrepresents the true purpose of the interview.
(d) Refuses upon request to identify the interviewer.
{ - (25) - } { + (28) + } 'Privileged information' means
information
{ - which - } { + that + } is identifiable with an individual
and { - which - } { + that + }:
(a) Relates to a claim for insurance benefits or a civil or
criminal proceeding involving the individual; and
(b) Is collected in connection with or in reasonable
anticipation of a claim for insurance benefits or a civil or
criminal proceeding involving the individual.
{ - (26) - } { + (29) + } 'Residual market mechanism' means
an association, organization or other entity involved in the
insuring of risks under ORS 735.005 to 735.145, 737.312 or other
provisions of the Insurance Code relating to insurance applicants
who are unable to procure insurance through normal insurance
markets.
{ - (27) - } { + (30) + } 'Termination of insurance
coverage' or ' termination of an insurance policy' means either a
cancellation or a nonrenewal of an insurance policy, in whole or
in part, for any reason other than the failure of a premium to be
paid as required by the policy.
SECTION 2. ORS 746.650 is amended to read:
746.650. (1) In the event of an adverse underwriting
decision { + , + } the insurer or agent responsible for the
decision
{ - shall - } { + must + }:
(a) Either provide the applicant, policyholder or individual
proposed for coverage with the specific reason or reasons for the
adverse underwriting decision in writing or advise the person
that upon written request the person may receive the specific
reason or reasons in writing; and
(b) Provide the applicant, policyholder or individual proposed
for coverage with a summary of the rights established under
subsection (2) of this section and ORS 746.640 and 746.645.
(2) Upon receipt of a written request within 90 business days
from the date of the mailing of notice or other communication of
an adverse underwriting decision to an applicant, policyholder or
individual proposed for coverage, the insurer or agent shall
furnish to the person within 21 business days from the date of
receipt of the written request:
(a) The specific reason or reasons for the adverse underwriting
decision, in writing, if this information was not initially
furnished in writing pursuant to subsection (1) of this section;
(b) The specific items of personal information and privileged
information that support these reasons, subject, however, to the
following:
(A) The insurer or agent { - shall - } { + is + } not
{ - be - } required to furnish specific items of privileged
information if it has a reasonable suspicion, based upon specific
information available for review by the Director of the
Department of Consumer and Business Services, that the applicant,
policyholder or individual proposed for coverage has engaged in
criminal activity, fraud, material misrepresentation or material
nondisclosure.
(B) Specific items of medical record information supplied by a
medical care institution or medical professional shall be
disclosed either directly to the individual about whom the
information relates or to a medical professional designated by
the individual and licensed to provide medical care with respect
to the condition to which the information relates, whichever the
insurer or agent prefers; and
(c) The names and addresses of the institutional sources
{ - which - } { + that + } supplied the specific items of
information described in paragraph (b) of this subsection.
However, the identity of any medical care institution or medical
professional shall be disclosed either directly to the individual
or to the designated medical professional, whichever the insurer
or agent prefers.
(3) The obligations imposed by this section upon an insurer or
agent may be satisfied by another insurer or agent authorized to
act on its behalf.
(4) When an adverse underwriting decision results solely from
an oral request or inquiry, the explanation of reasons and
summary of rights required by subsection (1) of this section may
be given orally.
{ + (5) When an adverse underwriting decision is based in
whole or in part on credit history or insurance score, the notice
provided under this section must include the significant factors
of the credit history or insurance score that resulted in the
adverse action. The insurer must also inform the consumer that
the consumer is entitled to a free copy of the consumer's
consumer report and provide the free copy upon request. + }
SECTION 3. { + Sections 4, 5 and 6 of this 2003 Act are added
to and made a part of ORS 746.600 to 746.690. + }
SECTION 4. { + (1) An insurer may not cancel or nonrenew
personal insurance based in whole or in part on a consumer's
credit history or insurance score. An offer of placement with an
affiliate insurer does not constitute cancellation or nonrenewal
under this section.
(2) An insurer may use credit history to decline coverage of
personal insurance only in combination with other substantive
underwriting factors. An offer of placement with an affiliate
insurer does not constitute a declination of insurance coverage.
(3) An insurer may not use the following types of credit
history to decline coverage of personal insurance, calculate an
insurance score or determine personal insurance premiums or
rates:
(a) The absence of credit history or the inability to determine
the consumer's credit history, if the insurer has received
accurate and complete information from the consumer.
(b) The number of credit inquiries about the consumer.
(c) Credit history or insurance score based on collection
accounts identified with a medical industry code.
(d) The initial purchase or finance of a vehicle or house that
adds a new loan to the consumer's existing credit history.
However, an insurer may consider the bill payment history of any
loan or the total number of loans, or both.
(e) The consumer's use of a particular type of credit card,
charge card or debit card.
(f) The consumer's total available line of credit. However, an
insurer may consider the total amount of outstanding debt in
relation to the total available line of credit.
(4) If an insurer uses disputed credit history to determine
eligibility for coverage of personal insurance and places a
consumer with an affiliate that charges higher premiums or offers
less favorable policy terms:
(a) The insurer shall reissue or rerate the policy retroactive
to the effective date of the current policy term; and
(b) The policy, as reissued or rerated, shall provide the
premiums and policy terms for which the consumer would have been
eligible if accurate credit history had been used to determine
eligibility.
(5) If an insurer charges higher premiums due to disputed
credit history, the insurer shall rerate the policy retroactive
to the effective date of the current policy term. As rerated, the
insurer shall charge the consumer the same premiums the consumer
would have been charged if accurate credit history was used to
calculate an insurance score.
(6) Subsections (4) and (5) of this section only apply if the
consumer resolves the credit dispute under the process set forth
in the federal Fair Credit Reporting Act (15 U.S.C. 1681) and
notifies the insurer in writing that the dispute has been
resolved. + }
SECTION 5. { + (1) An insurer may not use credit history to
determine personal insurance rates, premiums or eligibility for
coverage unless the insurer has filed the insurance scoring
models used by the insurer with the Director of the Department of
Consumer and Business Services. An insurance scoring model
includes all attributes and factors used in the calculation of an
insurance score.
(2) Insurance scoring models filed with the director under
subsection (1) of this section are confidential and not subject
to disclosure under ORS 192.410 to 192.505. + }
SECTION 6. { + The Director of the Department of Consumer and
Business Services shall report to the Seventy-third Legislative
Assembly on issues related to the use of credit history for
personal insurance underwriting and rating and the implementation
of sections 4 and 5 of this 2003 Act and ORS 746.600 and 746.650
as amended by sections 1 and 2 of this 2003 Act. The report must
include:
(1) A review of the implementation of sections 4 and 5 of this
2003 Act and ORS 746.600 and 746.650 as amended by sections 1 and
2 of this 2003 Act and how sections 4 and 5 of this 2003 Act and
ORS 746.600 and 746.650 as amended by sections 1 and 2 of this
2003 Act have impacted consumers; and
(2) A review and analysis of insurance scoring that includes
but is not limited to:
(a) The types of consumers, based on demographic factors, who
benefit from or are harmed by the use of credit history in
personal insurance underwriting and rating;
(b) The extent to which the use of credit history affects rates
charged to the consumer; and
(c) Whether insurance scoring results in discrimination against
certain types or classes of individuals. + }
SECTION 7. { + Sections 4 and 5 of this 2003 Act and the
amendments to ORS 746.600 and 746.650 by sections 1 and 2 of this
2003 Act apply to applications for issuance or renewal of
insurance policies made on or after the effective date of this
2003 Act. + }
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