NY State Senate Bill 2011-S694

Senate Bill S694

2011-2012 Legislative Session

Requires commercial lines insurers to provide notice to consumers when credit information is used in the rating or underwriting of such insurance

download bill text pdf

Archive: Last Bill Status - In Senate Committee Insurance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 04, 2012	referred to insurance
Jan 05, 2011	referred to insurance

2011-S694 (ACTIVE) - Details

Current Committee:: Senate Insurance
Law Section:: Insurance Law
Laws Affected:: Amd §§2801 & 2809, add §2809, Ins L
Versions Introduced in 2009-2010 Legislative Session:: S7233

2011-S694 (ACTIVE) - Summary

Requires commercial lines insurers to provide notice to consumers when credit information is used in the rating or underwriting of such insurance.

2011-S694 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S694

TITLE OF BILL:

An act
to amend the insurance law, in relation to use of credit information for
commercial lines insurance

PURPOSE OR GENERAL IDEA OF BILL:

Requires commercial lines insurers to provide notice to consumers when
credit information is used in the rating or underwriting of such
insurance.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends Insurance Law section 2801 to add two new
sub-sections (j) and (k) to define "commercial lines insurance" and
"commercial lines insurance consumer."

Section 2 amends Insurance Law section 2809 to clarify which sections
of the law are applicable and to renumber it section 2810.

Section 3 adds Insurance Law section 2809 to require commercial lines
insurers to provide notice to consumers when credit information is
used in the rating or underwriting of such insurance.

Section 4 states that the act will take effect on the 120th day after
enactment.

JUSTIFICATION:

Article 28 of the Insurance Law was added by Chapter 215 of the Laws
of 2004. It is based on a model act of the National Conference of
Insurance Legislators. It codified in state insurance law the
requirements of the federal Fair Credit Reporting Act, which requires
certain notices to be provided to "consumers" when their credit is
used in connection with underwriting or rating personal lines
insurance.

Increasingly, the credit history of individuals is also being accessed
and used by insurance companies in underwriting commercial lines of
insurance. This is especially true of small businesses. The credit
information of a sole proprietor or partner may now affect the
ability of such businesses to secure insurance and the rates they pay.

Under current law, many of the credit history provisions only apply to
personal lines insurance. This bill would require some of the same
protections now found in Article 2B to such individuals for personal
lines insurance to also include commercial lines insurance.

Specifically, if an individual's credit information is used, the
insurer would be required to notify the person of this fact. Further,
if the insurer makes an adverse decision based on the individual's
credit information, the individual must be given notice of such


action, the reasons, and the source of the credit-related information
which formed the basis for the insurer's action.

PRIOR LEGISLATIVE HISTORY:

2010 - S.7233 Referred to Insurance - A.5181 Referred to Insurance
2008 - A.6822 Referred to Insurance
2006 - A.10188 Referred to Insurance

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None.

EFFECTIVE DATE:

This bill shall become effective on the one hundred twentieth day
after it shall have become a law and shall apply to policies issued
and/or renewed on or after such date.

2011-S694 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   694

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 5, 2011
                               ___________

Introduced  by  Sen.  KLEIN  -- read twice and ordered printed, and when
  printed to be committed to the Committee on Insurance

AN ACT to amend the insurance law, in relation to use of credit informa-
  tion for commercial lines insurance

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. Section 2801 of the insurance law is amended by adding two
new subsections (j) and (k) to read as follows:
  (J) "COMMERCIAL LINES INSURANCE" SHALL MEAN ANY INSURANCE POLICY  THAT
IS  A  "COVERED POLICY" AS DEFINED IN PARAGRAPH ONE OF SUBSECTION (A) OF
SECTION THREE THOUSAND FOUR HUNDRED TWENTY-SIX OF THIS CHAPTER.
  (K) "COMMERCIAL LINES INSURANCE CONSUMER" SHALL MEAN A NATURAL  PERSON
WHOSE  CREDIT INFORMATION IS USED OR WHOSE INSURANCE SCORE IS CALCULATED
IN THE UNDERWRITING OR RATING OF A POLICY OF COMMERCIAL LINES INSURANCE.
  S 2. Section 2809 of the insurance law, as added by chapter 215 of the
laws of 2004, is amended to read as follows:
  S [2809] 2810. Severability. If any  [section,]  paragraph,  sentence,
clause,  phrase,  or any part of SECTIONS TWO THOUSAND EIGHT HUNDRED ONE
THROUGH TWO THOUSAND EIGHT HUNDRED EIGHT OF  this  article  is  declared
invalid  due  to  an interpretation of or a future change in the federal
Fair Credit Reporting Act or is  adjudged  by  any  court  of  competent
jurisdiction  to  be  invalid,  such  judgment, interpretation or change
shall not affect, impair or invalidate the  remainder  thereof  and  the
remaining  sections,  paragraphs,  sentences, clauses, phrases, or parts
thereof shall be in no manner affected thereby but shall remain in  full
force and effect.
  S 3. The insurance law is amended by adding a new section 2809 to read
as follows:
  S  2809.  USE OF CREDIT INFORMATION IN UNDERWRITING AND RATING COMMER-
CIAL LINES INSURANCE. (A) AN INSURER WRITING COMMERCIAL LINES  INSURANCE

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.

                                                           LBD00029-01-1

S. 694                              2

WHICH  USES  CREDIT INFORMATION ON A COMMERCIAL LINES INSURANCE CONSUMER
IN UNDERWRITING OR RATING SUCH INSURANCE SHALL DISCLOSE SUCH FACT TO THE
COMMERCIAL LINES INSURANCE CONSUMER AND NAME THE SOURCE  OF  THE  CREDIT
INFORMATION  THAT WILL BE USED. THE INSURER SHALL PROVIDE THE DISCLOSURE
REQUIRED BY THIS SUBSECTION TO ANY COMMERCIAL LINES  INSURANCE  CONSUMER
ON NEW AND RENEWED POLICIES IF CREDIT INFORMATION WILL BE USED.
  THE  DISCLOSURE  REQUIRED  BY  THIS  SUBSECTION SHALL BE PROVIDED IN A
SEPARATE WRITTEN DOCUMENT, WHICH NEED NOT  BE  PROVIDED  IN  A  SEPARATE
MAILING  AS  ANOTHER DOCUMENT SO LONG AS THE DISCLOSURE IS PROVIDED ON A
SEPARATE PIECE OF PAPER, EXCEPT THAT WITH REGARD TO A NEW  BUSINESS  THE
DISCLOSURE  MAY  BE  PROVIDED EITHER IN WRITING OR IN THE SAME MEDIUM AS
THE APPLICATION FOR COMMERCIAL LINES INSURANCE.
  (B) AN INSURER WRITING COMMERCIAL LINES INSURANCE WHICH, BASED ON  THE
CREDIT  INFORMATION  OF  A  COMMERCIAL LINES INSURANCE CONSUMER, DENIES,
CANCELS, NONRENEWS, INCREASES ANY CHARGE FOR OR MAKES ANY OTHER  ADVERSE
OR  UNFAVORABLE CHANGE IN THE TERMS OF COVERAGE OR ANY INSURANCE, EXIST-
ING OR APPLIED FOR, SHALL PROVIDE NOTIFICATION TO THE  COMMERCIAL  LINES
INSURANCE  CONSUMER  THAT  SUCH ACTION HAS BEEN TAKEN AND THE REASON FOR
SUCH ACTION. SUCH REASONS SHALL BE PROVIDED IN  SUFFICIENTLY  CLEAR  AND
SPECIFIC LANGUAGE SO THAT A PERSON CAN IDENTIFY THE BASIS FOR THE INSUR-
ER'S DETERMINATION AND IDENTIFY THE SOURCE OF THE CREDIT INFORMATION.
  S 4. This act shall take effect on the one hundred twentieth day after
it  shall  have  become  a law and shall apply to policies issued and/or
renewed on or after such date.

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