THE SENATE

S.B. NO.

2009

TWENTY-SIXTH LEGISLATURE, 2012

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to insurance.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


     SECTION 1.  Chapter 431, article 10, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part    .  Homeowners insurance claims history.

     §431:10-    Purpose.  The purpose of this part is to regulate the use of claims history information for homeowners insurance and provide certain consumer protections with respect to the use of this information.

     §431:10-    Scope; effective dates.  This part shall apply to all homeowners insurance policies delivered or issued for delivery in this State after July 31, 2012.

     §431:10-    Definitions.  As used in this part:

     "Adverse action" means any of the following in connection with the underwriting of homeowners insurance:

     (1)  A denial or cancellation of coverage;

     (2)  An increase in any charge; or

     (3)  A reduction or other adverse or unfavorable change in the terms of coverage of any insurance, regardless of whether the insurance is in existence or has been applied for.

     "Claim" means a request to an insurer for payment of a benefit by an insured or third party, except the term shall not include a mere report of loss or a question relating to coverage.

     "Claims history report" means information provided by a claims history report provider to an insurer, insurance producer, or other authorized party regarding the claims history or loss experience of natural persons or property.

     "Claims history report provider" means any person that regularly engages in the practice of assembling, collecting, or disseminating information regarding the individual claims history of natural persons or properties for the primary purpose of providing such information to insurers, insurance producers, or other authorized parties for underwriting or rating, except the term shall not include government institutions, insurers, and insurance producers.

     "Consumer" means an insured or an applicant for insurance coverage.

     "Inquiry" means a telephone call or other communication made to an insurer regarding the terms, conditions, or coverage afforded under an insurance contract that does not result in a claim, including questions concerning whether a policy will cover a loss or the process for filing a claim.  The term shall not constitute a claim for purposes of section 431:13-103(a)(11).

     "Insurance producer" means a person required to be licensed under the laws of this State to sell, solicit, or negotiate homeowners insurance.

     "Insurer" means any person, firm, association, or corporation duly licensed and authorized in this State to issue homeowners insurance.

     §431:10-    Use of insurance claims history information generally.  (a)  An insurer that uses insurance claims history or loss experience information to underwrite or rate risks shall not refuse to issue, refuse to renew, or cancel a homeowners insurance contract, or establish rates for coverage based solely on the claims history or loss experience of a previous owner of the property to be insured.

     (b)  If an insurer fails to act upon the information contained in a claims history report within thirty days of binding coverage, the insurer shall be precluded from declining homeowners insurance or terminating coverage based on that information.  This subsection shall not apply if the insurer has commenced a further investigation, inspection, or other review of the property to be insured as a result of information contained in the report within the thirty day period and the investigation, inspection, or other review has not yet concluded.  This subsection shall not apply to the renewal of an insurance policy.

     (c)  When a consumer applies for homeowners insurance, an insurer may not consider or take an adverse action based upon information contained in a claims history report that is more than five years old.

     (d)  Notwithstanding subsections (a) and (b) to the contrary, an insurer may refuse to issue, refuse to renew, or cancel homeowners insurance coverage, or establish rates for coverage based on the known condition or use of the premises, or due to fraudulent acts of the consumer.

     §431:10-    Use of inquiries and other information.  (a)  An insurer shall not refuse to issue, refuse to renew, or cancel a homeowners insurance contract, or establish rates for coverage based in whole or in part on inquiries made by any consumer to an insurer.

     (b)  An insurer shall not refuse to issue, refuse to renew, or cancel homeowners insurance coverage, or establish rates for coverage based in whole or in part on claims that have been closed without payment to or on behalf of an insured or third party, unless:

     (1)  More than one incident has occurred within the previous three years; or

     (2)  The claim that was closed without payment affects the nature of the risk and is predictive of future loss.

     (c)  Notwithstanding subsections (a) and (b) to the contrary, an insurer may refuse to issue, refuse to renew, or cancel homeowners insurance coverage, or establish rates for coverage based on the known condition or use of the premises, or due to fraudulent acts of the consumer.

     §431:10-    Dispute resolution and error correction.  (a)  If it is determined through the dispute resolution process set forth in the federal Fair Credit Reporting Act, 15 U.S.C. 1681i(a)(5), that the claims history information of an insured or property was incorrect or incomplete and if a homeowners insurer receives notice of this determination from either a consumer reporting agency or from the insured, the insurer shall re-underwrite and re-rate the consumer within thirty days of receiving the notice.  After re-underwriting or re-rating the insured, the insurer shall make any adjustments necessary, consistent with its underwriting and rating guidelines.  If an insurer determines that the insured has overpaid their 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.

     §431:10-    Disclosure to insurance consumers.  (a)  If an insurer writing homeowners insurance uses claims history or loss experience in underwriting or rating, the insurer shall disclose, either on the insurance application or at the time the insurance application is taken, that it may obtain claims history or loss experience information in connection with the application.  The disclosure may be oral, written, or in electronic form.  The disclosure shall explain the ways in which the insurer uses claims history or loss experience information, whether the claims history of the applicant and or property to be insured will be reviewed, and whether further claims incurred by the applicant will be reported to a claims history report provider.

     (b)  If a homeowners insurer takes an adverse action based upon the claims history report of a consumer or property, the insurer shall:

     (1)  Provide notification to the consumer than an adverse action has been taken, in accordance with the requirements of the federal Fair Credit Reporting Act, 15 U.S.C. 1681, et seq., if applicable; or

     (2)  Provide notification, upon request, to the consumer identifying the claim information that resulted in the adverse action.

An insurer may comply with this subsection by providing the requisite disclosure and claims information in any declination, nonrenewal, premium increase or surcharge, adverse action, or other notice required under other applicable law.

     §431:10-    Treatment of certain information.  (a)  A homeowners insurer shall not disclose or submit to any claims history report provider or any other consumer reporting agency that an inquiry was made to the insurer by a consumer.

     (b)  A claims history report provider shall not knowingly provide an insurer, insurance producer, or any other person with a claims history report that discloses that an inquiry was made to an insurer by a consumer.

     §431:10-    Disclosures by claims history report providers.  A claims history report provider shall disclose the codes, classifications, and guidelines utilized in its claims history reports to the commissioner, upon request."

     SECTION 2.  If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

     SECTION 3.  This Act shall take effect upon its approval.

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

Insurance; Claims History

 

Description:

Regulates the use of claims history information for homeowners insurance by insurers.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.