Z-1363.1 _______________________________________________
HOUSE BILL 2544
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State of Washington 57th Legislature 2002 Regular Session
By Representatives Cooper, Benson, Santos, Clements, Simpson, McIntire, Armstrong, Hunt, Romero, Dickerson, Upthegrove, Chase, Ogden, Haigh, Conway, Kenney, Campbell and Linville; by request of Governor Locke, Insurance Commissioner and Attorney General
Read first time 01/21/2002. Referred to Committee on Financial Institutions & Insurance.
AN ACT Relating to using credit history for insurance purposes; adding a new section to chapter 48.18 RCW; adding a new section to chapter 48.19 RCW; creating a new section; and providing an effective date.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1. A new section is added to chapter 48.18 RCW to read as follows:
RESTRICTIONS THAT APPLY TO PERSONAL INSURANCE UNDERWRITING. (1) For the purposes of this section:
(a) "Affiliated" has the same meaning as defined in RCW 48.31B.005(1).
(b) "Credit history" means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, or credit capacity, which is used, or expected to be used, or collected in whole or in part for the purpose of serving as a factor in establishing personal insurance premiums or eligibility for coverage.
(c) "Personal insurance" means property and casualty insurance to be used primarily for personal, family, or household purposes, such as homeowner and private passenger auto insurance.
(2) An insurer shall not deny, cancel, or refuse to renew personal insurance due in whole or in part to an insured's credit history. Placement with an affiliated insurer does not constitute denial of coverage under this section.
NEW SECTION. Sec. 2. A new section is added to chapter 48.19 RCW to read as follows:
DEFINITIONS‑-MAKING OF RATES‑-PERSONAL INSURANCE. (1) For the purposes of this section:
(a) "Affiliated" has the same meaning as defined in RCW 48.31B.005(1).
(b) "Credit history" means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, or credit capacity, which is used, or expected to be used, or collected in whole or in part for the purpose of serving as a factor in establishing personal insurance premiums or eligibility for coverage.
(c) "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.
(d) "Personal insurance" means property and casualty insurance to be used primarily for personal, family, or household purposes, such as homeowner and private passenger auto insurance.
(e) "Tier" means a category within a single insurer into which insureds with substantially like insuring, risk, or exposure factors and expense elements are placed for the purposes of determining rate or premium.
(2)(a) In the case of personal insurance, premium rates are subject to this subsection. An insurer may adjust rates based on credit history, in combination with other objective criteria, to create an insurance score to consider substantiated statistical differences in risk or exposure. The maximum premium differential based on credit history shall be no more than twenty percent. This restriction applies whether the adjustment is due to application of any of the following: Class rate, insurance score, minimum rate, rating plan, rating rule, rating schedule, rating tier, placement with an affiliated insurer, or any modification of each. Credit history shall not be combined or used in combination with other rating factors or rating rules in such a way that credit history affects premiums charged by more than twenty percent. For otherwise similarly situated insureds, the maximum premium differential based on credit history shall be no more than twenty percent.
(b) The twenty percent limit shall be computed relative to premiums charged to an insured with the most favorable credit history. Each insurer and affiliated insurer must demonstrate to the satisfaction of the commissioner that the total premium differential based on credit history is no greater than twenty percent.
(3) The commissioner may adopt such rules as are necessary to implement this section.
(4) This section applies to all personal insurance policies written or renewed on or after January 1, 2003.
NEW SECTION. Sec. 3. Captions used in this act are not any part of the law.
NEW SECTION. Sec. 4. Section 1 of this act takes effect July 1, 2002.
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