CHAPTER 21. USE OF CREDIT INFORMATION
IC 27-2-21
Chapter 21. Use of Credit Information
IC 27-2-21-1
"Adverse action"
Sec. 1. As used in this chapter, "adverse action" means:
(1) a denial or cancellation of;
(2) an increase in a charge for; or
(3) a reduction or other adverse or unfavorable change in theterms of coverage or amount of;
insurance in connection with the underwriting of a personalinsurance policy.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-2
"Affiliate"
Sec. 2. As used in this chapter, "affiliate" means a company thatcontrols, is controlled by, or is under common control with anothercompany.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-3
"Applicant"
Sec. 3. As used in this chapter, "applicant" means an individualwho has applied with an insurer for coverage under a personalinsurance policy.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-4
"Commissioner"
Sec. 4. As used in this chapter, "commissioner" refers to theinsurance commissioner appointed under IC 27-1-1-2.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-5
"Consumer"
Sec. 5. As used in this chapter, "consumer" means an:
(1) insured whose:
(A) credit information is used; or
(B) insurance score is calculated;
in the underwriting or rating of a personal insurance policy; or
(2) applicant for a personal insurance policy.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-6
"Consumer reporting agency"
Sec. 6. As used in this chapter, "consumer reporting agency"means a person that, for a monetary fee or dues or on a cooperativenonprofit basis, regularly engages in the practice of assembling orevaluating consumer credit information or other information
concerning consumers for the purpose of furnishing consumerreports to third parties.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-7
"Credit information"
Sec. 7. As used in this chapter, "credit information" means creditrelated information:
(1) derived from a credit report;
(2) found on a credit report; or
(3) provided on an application for a personal insurance policy.
The term does not include information that is not credit related,regardless of whether the information is contained in a credit reportor in an application or is used to calculate an insurance score.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-8
"Credit report"
Sec. 8. As used in this chapter, "credit report" means a written, anoral, or another communication of information by a consumerreporting agency concerning a consumer's creditworthiness, creditstanding, or credit capacity that is used or expected to be used orcollected as a factor to determine personal insurance policypremiums, eligibility for coverage, or tier placement.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-9
"Department"
Sec. 9. As used in this chapter, "department" refers to thedepartment of insurance created by IC 27-1-1-1.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-10
"Insurance producer"
Sec. 10. As used in this chapter, "insurance producer" has themeaning set forth in IC 27-1-15.6-2(7).
As added by P.L.201-2003, SEC.1.
IC 27-2-21-11
"Insurance score"
Sec. 11. As used in this chapter, "insurance score" means anumber or rating that is derived from an algorithm, computerapplication, model, or other process that is based on creditinformation for the purpose of predicting the future insurance lossexposure of an individual consumer.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-12
"Insured"
Sec. 12. As used in this chapter, "insured" means an individual
entitled to coverage under a personal insurance policy.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-13
"Insurer"
Sec. 13. As used in this chapter, "insurer" refers to an insurer (asdefined in IC 27-1-2-3) that issues a personal insurance policy.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-14
"Personal insurance policy"
Sec. 14. As used in this chapter, "personal insurance policy"means a policy that:
(1) provides one (1) or more of the kinds of insurance describedin Class 2 or Class 3 of IC 27-1-5-1; and
(2) is underwritten on an individual basis for personal, family,or household use.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-15
Applicability
Sec. 15. This chapter does not apply to commercial insurance.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-16
Requirements for insurer use of credit information
Sec. 16. (a) An insurer that uses credit information to underwriteor rate risks shall not do the following:
(1) Use an insurance score that is calculated using income,gender, address, ZIP code, ethnic group, religion, marital status,or nationality of the consumer as a factor.
(2) Deny, cancel, or decline to renew a personal insurancepolicy solely on the basis of credit information.
(3) Base an insured's renewal rate for a personal insurancepolicy solely on credit information.
(4) Take an adverse action against a consumer solely becausethe consumer does not have a credit card account.
(5) Consider an absence of credit information or an inability tocalculate an insurance score in underwriting or rating a personalinsurance policy, unless the insurer does one (1) of thefollowing:
(A) Presents to the commissioner information that theabsence or inability relates to the risk for the insurer andtreats the consumer as approved by the commissioner.
(B) Treats the consumer as if the consumer had neutralcredit information, as defined by the insurer.
(6) Take an adverse action against a consumer based on creditinformation unless the insurer obtains and uses:
(A) a credit report issued; or
(B) an insurance score calculated; not more than ninety (90) days before the date the personalinsurance policy is first written or the renewal is issued.
(7) Use the following as a negative factor in an insurancescoring methodology or in reviewing credit information for thepurpose of underwriting or rating a personal insurance policy:
(A) A credit inquiry:
(i) not initiated by the consumer; or
(ii) requested by the consumer for the consumer's owncredit information.
(B) A credit inquiry relating to insurance coverage.
(C) A late payment or a collection account with a medicalindustry code on the consumer's credit report.
(D) Multiple lender inquiries:
(i) coded by the consumer reporting agency on theconsumer's credit report as being from the home mortgageindustry; and
(ii) made within thirty (30) days of one another.
(E) Multiple lender inquiries:
(i) coded by the consumer reporting agency on theconsumer's credit report as being from the automobilelending industry; and
(ii) made within thirty (30) days of one another.
(b) An insurer that uses credit information to underwrite or raterisks shall, at annual renewal upon the request of an insured or aninsured's agent, re-underwrite and re-rate the insured's personalinsurance policy based on a current credit report or insurance scoreunless one (1) of the following applies:
(1) The insurer's treatment of the consumer is otherwiseapproved by the commissioner.
(2) The insured is in the most favorably priced tier of theinsurer, within a group of affiliated insurers.
(3) Credit information was not used for underwriting or ratingthe insured when the personal insurance policy was initiallywritten.
(4) The insurer reevaluates the insured at least every thirty-six(36) months after a personal insurance policy is issued based onunderwriting or rating factors other than credit information.
(5) The insurer has re-underwritten and re-rated the insured'spersonal insurance policy based on a credit report obtained oran insurance score recalculated less than twelve (12) monthsbefore the date of the request by the insured or the insured'sagent.
(c) An insurer that uses credit information to underwrite or raterisks may obtain current credit information upon the renewal of apersonal insurance policy when renewal occurs more frequently thanevery thirty-six (36) months if consistent with the insurer'sunderwriting guidelines.
As added by P.L.201-2003, SEC.1. Amended by P.L.84-2009, SEC.1.
IC 27-2-21-17 Incorrect or incomplete credit information; notice; remedy
Sec. 17. (a) If:
(1) a determination is made through the dispute resolutionprocess set forth in the federal Fair Credit Reporting Act, 15U.S.C. 1681i(a)(5), that the credit information of a currentinsured was incorrect or incomplete; and
(2) the insurer receives notice of the determination from theconsumer reporting agency or the insured;
the insurer shall re-underwrite and re-rate the insured not more thanthirty (30) days after receiving the notice.
(b) After an insurer re-underwrites or re-rates an insured asdescribed in subsection (a), the insurer shall:
(1) make necessary adjustments, consistent with the insurer'sunderwriting and rating guidelines; and
(2) if the insurer determines that the insured has overpaid apremium, refund to the insured the amount of overpaymentcalculated back to the shorter of the:
(A) immediately preceding twelve (12) month period ofcoverage; or
(B) actual policy period.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-18
Disclosure of use of credit information
Sec. 18. (a) If an insurer uses credit information in underwritingor rating a consumer, the insurer or the insurer's agent shall disclose,either on the insurance application or at the time the insuranceapplication is taken, that the insurer may obtain credit information inconnection with the application. The disclosure must be:
(1) written; or
(2) provided to the consumer in the same medium as theapplication for insurance.
The insurer is not required to provide the disclosure statementrequired under this section to an insured on a renewal policy if theinsured has previously been provided a disclosure statement.
(b) Use of the following sample disclosure statement constitutescompliance with this section: "In connection with this application forinsurance, we may review your credit report or obtain or use a creditbased insurance score based on the information contained in thatcredit report. We may use a third party in connection with thedevelopment of your insurance score.".
As added by P.L.201-2003, SEC.1.
IC 27-2-21-19
Adverse action based on credit information; notice
Sec. 19. (a) If an insurer takes an adverse action based on creditinformation, the insurer shall:
(1) provide notice to the consumer that an adverse action hasbeen taken, in accordance with the requirements of the federalFair Credit Reporting Act, 15 U.S.C. 1681m(a); and (2) provide notice to the consumer explaining the reason for theadverse action.
(b) The reason provided under subsection (a)(2) must be providedin sufficiently clear and specific language so that an individual canidentify the basis for the insurer's decision to take an adverse action.The notice must include a description of all factors up to four (4)primary factors that were the primary influences of the adverseaction. The use of generalized terms such as "poor credit history","poor credit rating", or "poor insurance score" does not meetrequirements of this subsection. A standardized credit explanationprovided by a consumer reporting agency or other third party vendormeets the requirements of this section.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-20
Filings
Sec. 20. (a) An insurer that uses an insurance score to underwriteand rate risks shall file the insurer's scoring models or other scoringprocesses with the department.
(b) A third party may file a scoring model or scoring process onbehalf of an insurer.
(c) A filing that includes insurance scoring may include lossexperience justifying the use of credit information.
(d) A filing related to credit information is confidential.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-21
Insurance producer indemnification, defense, and hold harmless
Sec. 21. (a) An insurer shall indemnify and defend an insuranceproducer and hold an insurance producer harmless from and againstliability, fees, and costs arising out of or related to the actions, errors,or omissions of the insurance producer relating to a use of creditinformation if the insurance producer:
(1) obtains or uses credit information or insurance scores for theinsurer;
(2) follows the instructions of or procedures established by theinsurer; and
(3) complies with applicable laws and regulations.
(b) This section does not provide a consumer with a cause ofaction that does not exist in the absence of this section.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-22
Consumer reporting agency prohibitions
Sec. 22. (a) A consumer reporting agency may not provide or selldata or lists that include information submitted in conjunction with:
(1) an insurance inquiry about a consumer's credit information;or
(2) a request for a credit report or insurance score;
including the expiration dates of an insurance policy or other
information that may identify periods during which a consumer'sinsurance expires and the terms and conditions of the consumer'sinsurance coverage.
(b) The restrictions under subsection (a) do not apply to data orlists a consumer reporting agency supplies to an:
(1) insurance producer from whom the information wasreceived;
(2) insurer on behalf of which the insurance producer describedin subdivision (1) acted; or
(3) affiliate or holding company of the insurer described insubdivision (2).
(c) This section does not prohibit an insurer from obtaining aclaim history report or a motor vehicle report.
As added by P.L.201-2003, SEC.1.
IC 27-2-21-23
Violations
Sec. 23. A violation of this chapter by an insurer is an unfair anddeceptive act and practice in the business of insurance underIC 27-4-1-4.
As added by P.L.201-2003, SEC.1.