FOR IMMEDIATE RELEASE
May 8, 2003
FOR MORE INFORMATION, CONTACT:
Phil Lackman, Vice President of Government Relations
(800) 628-6436 or plackman@piiai.org

PIIAI Hails Approval of Credit Scoring Bill

The Professional Independent Insurance Agents of Illinois applauds the Senate's approval of HB 1640 Osmond (Jacobs) Insurers Use of Credit Scoring. The bill, which passed the Senate on Tuesday, May 6, will now be sent to the governor for his consideration. The Senate approved the measure on a vote of 57-0-0.

HB 1640 represents a culmination of a process begun by the late Tim Osmond, a State Representative and independent agent from Antioch. Osmond sought to put together a piece of model legislation through the National Conference of Insurance Legislators (NCOIL) which could be adopted by state legislators throughout the country, restricting how insurers use credit in personal lines rating and underwriting.

However, due to Osmond's untimely death last December, the legislation's status was in doubt. His wife JoAnn, appointed to fill his seat, picked up the legislation and garnered over 70 cosponsors and won unanimous approval in the House. Senate Committee Chair Denny Jacobs then sponsored the bill in the Senate.

HB 1640 establishes several limitations on insurers use of credit in underwriting and rating personal lines insurance. Among the more significant provisions the bill provides that:

Insurers shall not:
a) Use income, gender, address, ethnic group, religion, marital status or nationality in calculating an insurance score.
b) Deny, cancel or non-renew solely on the basis of credit without consideration of other underwriting factors.
c) Base renewal rates solely on credit.
d) Take an adverse action against a consumer solely because of a lack of a credit card.
e) Consider no credit history or no credit score as a negative, unless they filed a certification actuarially justifying different treatment.
f) Take an adverse action at issuance or renewal unless the credit report is fresh-90 days or less.

Insurers must re-underwrite and re-rate at renewal if requested by agent or insured.
a) Exemptions are provided.

Insurers shall not use the following credit inquiries as a negative factor.
a) Those not initiated by the consumer or those requested by the consumer regarding their own credit information.
b) Inquiries relating to insurance coverage.
c) Collection accounts with a medical code.
d) Multiple lender inquiries relating to the mortgage industry and auto lending industry.

Insurers shall notify consumers at the time of application that their credit may be reviewed and used.

Insurers shall notify consumer that an adverse action has taken place and explain reasons.

Insurers must file their scoring models with the Department of Insurance.

Prohibits Sale of expiration information by consumer Reporting Agencies-ChoicePoint.

To view the entire text of the bill, visit http://www.legis.state.il.us/legislation/billstatus.asp?DocNum=1640&GAID=3&DocTypeID=HB&LegID=2428&SessionID=3.

The Professional Independent Insurance Agents of Illinois is an association representing independent insurance agents throughout the state. PIIAI membership is comprised of 1,500 insurance agencies representing 12,000 licensed independent agents engaged in all facets of the insurance industry, including property, casualty, life and health. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. In addition to serving the professional needs of members, PIIAI works for the betterment of the insurance industry through legislative and consumer awareness programs. The PIIAI is headquartered in Springfield, Illinois. Visit PIIAI's consumer website at www.ChooseIndependent.com or agent website at www.piiai.org.

###