§ 27-6-53 - Use of credit rating.
SECTION 27-6-53
§ 27-6-53 Use of credit rating. – (a) An insurer may use insurance scoring for rating and underwriting ofhomeowners' insurance only under the following conditions:
(1) The insurer demonstrates the predictive nature of theirinsurance score to the insurance division.
(2) An insurer shall, once every two (2) years if requestedby an existing customer, obtain an updated insurance score for the customer.If, after obtaining the insurance score, the customer has improved his, her orits credit rating, the user of the information shall afford the customer anydecrease in rates that are available due to the improved rating. The user maynot increase the rate of an existing customer based solely on a worsening inthe customer's insurance score unless: (i) the worsening is due to abankruptcy, tax lien, garnishment, foreclosure or judgment; or (ii) if asubsequent insurance score no sooner than six (6) months later confirms theworsening in score. Should an existing customer's score change as the result ofan updated credit report, the decrease or increase in rates must be done atrenewal subject to conditions established herein.
(3) An insurer shall not decline insurance for a new customerbased solely on an insurance score, or absence of an insurance score; and aninsurer shall not cancel, nonrenew or increase the rate of an existing customerbased solely on a worsening in a customer's insurance score unless: (i) theworsening is due to a bankruptcy, tax lien, garnishment, foreclosure orjudgment; or (ii) if a subsequent insurance score no sooner than six (6) monthslater confirms the worsening in score. Should an existing customer's scorechange as the result of an updated credit report, the decrease or increase inrates must be done at renewal subject to conditions established herein.
(4) No insurer is obligated to obtain a current credit reportor insurance score for an insured if: the insured is in the mostfavorably-priced tier of the insurer, within a group of affiliated insures; orcredit was not used for the insured when the policy was initially written.However, the insurer shall have the discretion to use credit for the insuredupon renewal, if consistent with its underwriting guidelines. The user may notincrease the rate of an existing customer based solely on a worsening in thecustomer's insurance score unless: (i) the worsening is due to a bankruptcy,tax lien, garnishment, foreclosure or judgment; or (ii) if a subsequentinsurance score no sooner than six (6) months later confirms the worsening inscore. Should an existing customer's score change as the result of an updatedcredit report, the decrease or increase in rates must be done at renewalsubject to conditions established herein.
(5) If a credit bureau determines that disputed informationis inaccurate or incorrect and that information was used in determining aninsurance score which resulted in a denial, cancellation or nonrenewal of orhigher premiums or less favorable policy terms for a consumer, the insurershall, within thirty (30) days of receiving notice of correction, reissue orre-rate the policy by refunding the amount of the overpayment of premium basedon the corrected insurance score retroactive to the shorter of the last twelve(12) months of coverage or the actual period of coverage. An "insurance score"as used in this section shall be defined as a number or rating that is derivedfrom an algorithm, computer application, model or other process that is basedin whole or in part on credit history.
(b) Agents shall be held harmless by insurers for all acts,efforts and disclosures in obtaining an insurance score on the insurer'sbehalf. The commissioner is authorized and empowered to establish rules andregulations to carry out the provisions of this section and to fulfill thegoals of this section.
(c) Notwithstanding the above, an insurer authorized to dobusiness in Rhode Island that uses credit information to underwrite or raterisks, shall not use the following as a negative factor in any insurancescoring methodology or in reviewing credit information for the purpose ofunderwriting or rating a policy of personal insurance:
(1) Credit inquiries not initiated by the consumer orinquiries requested by the consumer for his or her own credit information;
(2) Inquiries relating to insurance coverage, if soidentified on a consumer's credit report;
(3) Collection accounts with a medical industry code, if soidentified on the consumer's credit report;
(4) Multiple lender inquiries, if coded by the consumerreporting agency on the consumer's credit report as being from the homemortgage industry and made within thirty (30) days of one another, unless onlyone inquiry is considered;
(5) Multiple lender inquiries, if coded by the consumerreporting agency on the consumer's credit report as being from the automobilelending industry and made within thirty (30) days of one another, unless onlyone inquiry is considered.
(d) No consumer reporting agency shall provide or sell dataor lists that include any information that in whole or in part was submitted inconjunction with an insurance inquiry about a consumer's credit information ora request for a credit report or insurance score. Such information includes,but is not limited to, the expiration dates of an insurance policy or any otherinformation that may identify time periods during which a consumer's insurancemay expire and the terms and conditions of the consumer's insurance coverage.
(e) The restrictions provided in subsection (d) of thissection do not apply to data or lists the consumer reporting agency supplies tothe insurance [agent/producer] from whom information was received,the insurer on who's behalf such [agent/producer] acted, or suchinsurer's affiliates or holding companies.
(f) Nothing in this section shall be construed to restrictany insurer from being able to obtain a claims history report or a motorvehicle report.