An insurer authorized to do business in this state that uses credit information to underwrite or rate risks for personal insurance shall not:

(1) 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 ninety (90) days from the date the personal insurance policy is first written or renewal is issued;

Terms Used In Tennessee Code 56-5-202

  • 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. See Tennessee Code 56-5-201
  • Code: includes the Tennessee Code and all amendments and revisions to the code and all additions and supplements to the code. See Tennessee Code 1-3-105
  • Commissioner: means the commissioner of commerce and insurance. See Tennessee Code 56-1-102
  • 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 the policy. See Tennessee Code 56-5-201
  • Consumer reporting agency: means any entity 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. See Tennessee Code 56-5-201
  • 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. See Tennessee Code 56-5-201
  • Credit report: A detailed report of an individual's credit history prepared by a credit bureau and used by a lender in determining a loan applicant's creditworthiness. Source: OCC
  • 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 that 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. See Tennessee Code 56-5-201
  • Credit Score: A number, roughly between 300 and 800, that measures an individual's credit worthiness. The most well-known type of credit score is the FICO score. This score represents the answer from a mathematical formula that assigns numerical values to various pieces of information in your credit report. Source: OCC
  • Insurance score: means a number or rating that is derived from an algorithm, computer application, 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. See Tennessee Code 56-5-201
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Person: means any association, aggregate of individuals, business, company, corporation, individual, joint-stock company, Lloyds-type organization, organization, partnership, receiver, reciprocal or interinsurance exchange, trustee or society. See Tennessee Code 56-16-102
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
(2)

(A) Use credit information unless no later than thirty-six (36) months following the last time that the insurer obtained current credit information for the insured, the insurer recalculates the insurance score or obtains an updated credit report. The insurer is not required to comply with this subdivision (2) if:

(i) The insured is in the most favorably-priced tier of the insurer or within a group of affiliated insurers, for the type of policy covering the insured;
(ii) If the insurer has determined not to use credit information in its re-evaluation of the insured upon renewal; or
(iii) If the insurer provides a notice to the insured on an annual basis of the insured’s right to voluntarily request that their insurance credit score be rerun and reevaluated based on the current information available for the next effective renewal date of the insured’s policy. A notice provided under this section shall be in writing in clear and concise language and shall not contain any information other than what is necessary to notify the insured of this right. An insurer need not recalculate the insurance score or obtain the updated credit report of a consumer more frequently than once every twelve (12) months;
(B) Nothing in subdivision (2)(A) shall be deemed to require any insurer to use credit information in rating or underwriting. The commissioner may promulgate rules to effectuate this section;
(3) 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 each person‘s own credit information;
(B) Inquiries relating to insurance coverage, if so identified on a consumer’s credit report;
(C) 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 (30) days of one another, unless only one (1) inquiry is considered;
(D) 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 (30) days from one another, unless only one (1) inquiry is considered; or
(E) Collection accounts with a medical industry code, if so identified on the consumer’s credit report;
(4) 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;
(5) Base an insured’s renewal rates for personal insurance solely upon credit information, without consideration of any other applicable factor independent of credit information;
(6) Take an adverse action against a consumer solely because the consumer does not have a credit account, without consideration of any other applicable factor independent of credit information;
(7) Consider an absence of credit information or an inability to calculate an insurance score in underwriting or rating personal insurance, unless the insurer either treats the consumer as if the consumer had neutral credit information as defined by the insurer or unless the insurer treats the consumer in a manner otherwise approved by the commissioner of commerce and insurance; and
(8) Use an insurance score that is calculated using income, gender, address, ethnic group, religion, marital status, nationality, education, or occupation of the consumer as a factor. Nothing in this subdivision (8) shall preclude an insurer from underwriting personal insurance on the basis of information in the insurance application that is not credit information.
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