26.1-25.1 Personal Insurance Credit Information - North Dakota Statutes

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CHAPTER 26.1-25.1PERSONAL INSURANCE CREDIT INFORMATION26.1-25.1-01. Scope. This chapter applies to personal insurance and does not apply tocommercial insurance.26.1-25.1-02.Definitions.As used in this chapter, unless the context otherwiserequires:1."Adverse action" means a denial or cancellation of, an increase in any charge for, or
a reduction or other adverse or unfavorable change in the terms of coverage or
amount of, any insurance, existing or applied for, in connection with the underwriting
of personal insurance.2."Affiliate" means any company that controls, is controlled by, or is under common
control with another company.3."Applicant" means an individual who has applied to be covered by a personal
insurance policy with an insurer.4."Consumer" means an insured whose credit information is used or whose insurance
score is calculated in the underwriting or rating of a personal insurance policy or an
applicant for such a policy.5."Consumer reporting agency" means any person that for monetary fees, dues, or on
a cooperative nonprofit basis, regularly engages in whole or in part in the practice of
assembling or evaluating consumer credit information or other information on
consumers for the purpose of furnishing consumer reports to third parties.6."Credit information" means any credit-related information derived from a credit
report, found on a credit report itself, or provided on an application for personal
insurance.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.7."Credit report" means any written, oral, or other communication of information by a
consumer reporting agency bearing on a consumer's creditworthiness, 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 to determine personal
insurance premiums, eligibility for coverage, or tier placement.8."Insurance score" means a number or rating that is derived from an algorithm, a
computer application, a model, or other process that is based in whole or in part on
credit information for the purposes of predicting the future insurance loss exposure
of an individual applicant or insured.9."Personalinsurance"meansprivatepassengerautomobile,homeowners,motorcycle, mobile homeowners, and noncommercial dwelling fire insurance
policies.Such policies must be individually underwritten for personal, family, orhousehold use. No other type of insurance is included as personal insurance for the
purpose of this chapter.26.1-25.1-03. Use of credit information. An insurer authorized to do business in thisstate which uses credit information to underwrite or rate risks may not: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.Page No. 12.Deny, cancel, or nonrenew a policy of personal insurance solely on the basis of
credit information, without consideration of any other applicable underwriting factor
independent of credit information and not expressly prohibited by this section.3.Take an adverse action against a consumer solely because the consumer does not
have a credit card account without consideration of any other applicable factor
independent of credit information.4.Consider an absence of credit information or an inability to calculate an insurance
score in underwriting or rating personal insurance unless the insurer does one of the
following:a.Treats the consumer as otherwise approved by the insurance commissioner if
the insurer presents information that such an absence or inability relates to the
risk for the insurer.b.Treats the consumer as if the applicant or insured had neutral credit
information, as defined by the insurer.c.Excludes the use of credit information as a factor and use only other
underwriting criteria.5.Take an adverse action against a consumer based on credit information, unless an
insurer obtains and uses a credit report issued or an insurance score calculated
within one hundred twenty days from the date the policy is first written or renewal is
issued.6.Use credit information unless not later than every thirty-six months following the last
time that the insurer obtained current credit information for the insured, the insurer
recalculatestheinsurancescore,orobtainsanupdatedcreditreport.Notwithstanding this section:a.At annual renewal, upon the request of a consumer or the consumer's agent,
the insurer shall reunderwrite and rerate the policy based upon a current credit
report or insurance score. An insurer need not recalculate the insurance score
or obtain the updated credit report of a consumer more frequently than once in
a twelve-month period.b.The insurer may obtain current credit information upon any renewal before the
thirty-six months if consistent with the insurer's underwriting guidelines.c.An insurer need not obtain current credit information for an insured, despite the
requirements of subdivision a, if one of the following applies:(1)The insurer is treating the consumer as otherwise approved by the
commissioner.(2)The insured is in the most favorably priced tier of the insurer, within a
group of affiliated insurers. However, the insurer may order such report if
consistent with the insurer's underwriting guidelines.(3)Credit was not used for underwriting or rating such insured when the
policy was initially written.However, the insurer may use credit forunderwriting or rating such insured upon renewal if consistent with the
insurer's underwriting guidelines.(4)The insurer reevaluates the insured beginning no later than thirty-six
months after inception and thereafter based upon other underwriting or
rating factors, excluding credit information.Page No. 27.Use the following as a negative factor in any insurance scoring methodology or in
reviewing credit information for the purpose of underwriting or rating a policy of
personal insurance:a.Credit inquiries not initiated by the consumer or inquiries requested by the
consumer for the consumer's own credit information.b.Inquiries relating to insurance coverage if so identified on a consumer's credit
report.c.Collection accounts with a medical industry code if so identified on the
consumer's credit report.d.Multiple lender inquiries, if coded by the consumer reporting agency on the
consumer's credit report as being from the home mortgage industry and made
within thirty days of one another, unless only one inquiry is considered.e.Multiple lender inquiries, if coded by the consumer reporting agency on the
consumer's credit report as being from the automobile lending industry and
made within thirty days of one another, unless only one inquiry is considered.26.1-25.1-04. Dispute resolution and error correction. If it is determined through thedispute resolution process set forth in the federal Fair Credit Reporting Act [Pub. L. 90-321;
15 U.S.C. 1681i(a)(5)] that the credit information of a current insured was incorrect or incomplete
and if the insurer receives notice of such determination from either the consumer reporting
agency or from the insured, the insurer shall reunderwrite and rerate the consumer within thirty
days of receiving the notice. After reunderwriting or rerating the insured, the insurer shall make
any adjustments necessary, consistent with the insurer's underwriting and rating guidelines. If an
insurer determines that the insured has overpaid premium, the insurer shall refund to the insured
the amount of overpayment calculated back to the shorter of either the last twelve months of
coverage or the actual policy period.26.1-25.1-05. Initial notification.1.If an insurer writing personal insurance 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 or the insurer's agent may obtain credit information in connection with such
application. Such disclosure must be either written or provided to an applicant in the
same medium as the application for insurance. The insurer or the insurer's agent
need not provide the disclosure statement required under this section to any insured
on a renewal policy if such consumer has previously been provided a disclosure
statement.2.Use of the following example 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."26.1-25.1-06. Adverse action notification. If an insurer takes an adverse action basedupon credit information, the insurer must meet the notice requirements of this section.Theinsurer shall:1.Provide notification to the consumer that an adverse action has been taken, in
accordance with the requirements of the federal Fair Credit Reporting Act [Pub. L.
90-321; 15 U.S.C. 1681m(a)]; andPage No. 32.Provide notification to the consumer explaining the reason for the adverse action.
The reasons must be provided in sufficiently clear and specific language so that a
person can identify the basis for the insurer's decision to take an adverse action.
The notification must include a description of up to four 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 the
explanation requirements of this subsection.Standardized credit explanationsprovided by consumer reporting agencies or other third-party vendors are deemed to
comply with this section.26.1-25.1-07. Filing.1.An insurer that uses insurance scores to underwrite or rate risks shall file the
insurer's scoring models or other scoring processes with the insurance department.
A third party may file scoring models on behalf of an insurer. A filing that includes
insurance scoring must include loss experience justifying the use of credit
information.2.Any scoring models, scoring processes, and information related to scoring models or
processes filed by or on behalf of an insurer pursuant to subsection 1 is considered
a trade secret.26.1-25.1-08.Indemnification.An insurer shall indemnify, defend, and hold agentsharmless from and against all liability, fees, and costs arising out of or relating to the actions,
errors, or omissions of a producer who obtains or uses credit information or insurance scores for
an insurer, provided the producer follows the instructions of or procedures established by the
insurer and complies with any applicable law or rule. This section does not provide a consumer
or other insured with a cause of action that does not exist in the absence of this section.26.1-25.1-09. Sale of policy term information by consumer reporting agency.1.A consumer reporting agency may not provide or sell data or lists that include any
information that in whole or in part was submitted in conjunction with an insurance
inquiry about a consumer's credit information or a request for a credit report or
insurance score. Such information includes the expiration dates of an insurance
policy or any other information that may identify time periods during which a
consumer's insurance may expire and the terms and conditions of the consumer's
insurance coverage.2.Subsection 1 does not apply to data or lists the consumer reporting agency supplies
to the insurance producer from whom information was received, the insurer on
whose behalf such producer acted, or such insurer's affiliates or holding companies.3.This section does not restrict any insurer from being able to obtain a claims history
report or a motor vehicle report.26.1-25.1-10. Severability. If any provision of this chapter is declared invalid due to aninterpretation of or a future change in the federal Fair Credit Reporting Act [Pub. L. 90-321;
15 U.S.C. 1681 et seq.], the remaining provisions of this chapter are not affected and remain in
effect.26.1-25.1-11. Application. This chapter applies to personal insurance policies eitherwritten to be effective or renewed after April 30, 2004.Page No. 4Document Outlinechapter 26.1-25.1 personal insurance credit information