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 the
terms of coverage or amount of;
insurance in connection with the underwriting of a personal
insurance 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 that
controls, is controlled by, or is under common control with another
company.
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 individual
who has applied with an insurer for coverage under a personal
insurance 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 the
insurance 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 cooperative
nonprofit basis, regularly engages in the practice of assembling or
evaluating consumer credit information or other information
concerning consumers for the purpose of furnishing consumer
reports 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 credit
related 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 report
or 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, an
oral, or another communication of information by a consumer
reporting agency concerning a consumer's creditworthiness, credit
standing, or credit capacity that is used or expected to be used or
collected as a factor to determine personal insurance policy
premiums, 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 the
department 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 the
meaning 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 a
number or rating that is derived from an algorithm, computer
application, model, or other process that is based on credit
information for the purpose of predicting the future insurance loss
exposure 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 (as
defined 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 described
in 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 underwrite
or 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 insurance
policy solely on the basis of credit information.
(3) Base an insured's renewal rate for a personal insurance
policy solely on credit information.
(4) Take an adverse action against a consumer solely because
the consumer does not have a credit card account.
(5) Consider an absence of credit information or an inability to
calculate an insurance score in underwriting or rating a personal
insurance policy, unless the insurer does one (1) of the
following:
(A) Presents to the commissioner information that the
absence or inability relates to the risk for the insurer and
treats the consumer as approved by the commissioner.
(B) Treats the consumer as if the consumer had neutral
credit information, as defined by the insurer.
(6) Take an adverse action against a consumer based on credit
information 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 personal
insurance policy is first written or the renewal is issued.
(7) Use the following as a negative factor in an insurance
scoring methodology or in reviewing credit information for the
purpose 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 own
credit information.
(B) A credit inquiry relating to insurance coverage.
(C) A late payment or a collection account with a medical
industry code on the consumer's credit report.
(D) Multiple lender inquiries:
(i) coded by the consumer reporting agency on the
consumer's credit report as being from the home mortgage
industry; and
(ii) made within thirty (30) days of one another.
(E) Multiple lender inquiries:
(i) coded by the consumer reporting agency on the
consumer's credit report as being from the automobile
lending industry; and
(ii) made within thirty (30) days of one another.
(b) An insurer that uses credit information to underwrite or rate
risks shall, at annual renewal upon the request of an insured or an
insured's agent, re-underwrite and re-rate the insured's personal
insurance policy based on a current credit report or insurance score
unless one (1) of the following applies:
(1) The insurer's treatment of the consumer is otherwise
approved by the commissioner.
(2) The insured is in the most favorably priced tier of the
insurer, within a group of affiliated insurers.
(3) Credit information was not used for underwriting or rating
the insured when the personal insurance policy was initially
written.
(4) The insurer reevaluates the insured at least every thirty-six
(36) months after a personal insurance policy is issued based on
underwriting or rating factors other than credit information.
(5) The insurer has re-underwritten and re-rated the insured's
personal insurance policy based on a credit report obtained or
an insurance score recalculated less than twelve (12) months
before the date of the request by the insured or the insured's
agent.
(c) An insurer that uses credit information to underwrite or rate
risks may obtain current credit information upon the renewal of a
personal insurance policy when renewal occurs more frequently than
every thirty-six (36) months if consistent with the insurer's
underwriting 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 resolution
process set forth in the federal Fair Credit Reporting Act, 15
U.S.C. 1681i(a)(5), that the credit information of a current
insured was incorrect or incomplete; and
(2) the insurer receives notice of the determination from the
consumer reporting agency or the insured;
the insurer shall re-underwrite and re-rate the insured not more than
thirty (30) days after receiving the notice.
(b) After an insurer re-underwrites or re-rates an insured as
described in subsection (a), the insurer shall:
(1) make necessary adjustments, consistent with the insurer's
underwriting and rating guidelines; and
(2) if the insurer determines that the insured has overpaid a
premium, refund to the insured the amount of overpayment
calculated back to the shorter of the:
(A) immediately preceding twelve (12) month period of
coverage; 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 underwriting
or rating a consumer, the insurer or the insurer's agent shall disclose,
either on the insurance application or at the time the insurance
application is taken, that the insurer may obtain credit information in
connection with the application. The disclosure must be:
(1) written; or
(2) provided to the consumer in the same medium as the
application for insurance.
The insurer is not required to provide the disclosure statement
required under this section to an insured on a renewal policy if the
insured has previously been provided a disclosure statement.
(b) Use of the following sample disclosure statement constitutes
compliance with this section: "In connection with this application for
insurance, we may review your credit report or obtain or use a credit
based insurance score based on the information contained in that
credit report. We may use a third party in connection with the
development 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 credit
information, the insurer shall:
(1) provide notice to the consumer that an adverse action has
been taken, in accordance with the requirements of the federal
Fair Credit Reporting Act, 15 U.S.C. 1681m(a); and
(2) provide notice to the consumer explaining the reason for the
adverse action.
(b) The reason provided under subsection (a)(2) must be provided
in sufficiently clear and specific language so that an individual can
identify 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 adverse
action. The use of generalized terms such as "poor credit history",
"poor credit rating", or "poor insurance score" does not meet
requirements of this subsection. A standardized credit explanation
provided by a consumer reporting agency or other third party vendor
meets 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 underwrite
and rate risks shall file the insurer's scoring models or other scoring
processes with the department.
(b) A third party may file a scoring model or scoring process on
behalf of an insurer.
(c) A filing that includes insurance scoring may include loss
experience 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 insurance
producer and hold an insurance producer harmless from and against
liability, fees, and costs arising out of or related to the actions, errors,
or omissions of the insurance producer relating to a use of credit
information if the insurance producer:
(1) obtains or uses credit information or insurance scores for the
insurer;
(2) follows the instructions of or procedures established by the
insurer; and
(3) complies with applicable laws and regulations.
(b) This section does not provide a consumer with a cause of
action 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 sell
data 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's
insurance expires and the terms and conditions of the consumer's
insurance coverage.
(b) The restrictions under subsection (a) do not apply to data or
lists a consumer reporting agency supplies to an:
(1) insurance producer from whom the information was
received;
(2) insurer on behalf of which the insurance producer described
in subdivision (1) acted; or
(3) affiliate or holding company of the insurer described in
subdivision (2).
(c) This section does not prohibit an insurer from obtaining a
claim 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 and
deceptive act and practice in the business of insurance under
IC 27-4-1-4.
As added by P.L.201-2003, SEC.1.