Michigan Laws 500.2153 – Credit information or insurance score; use
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Terms Used In Michigan Laws 500.2153
- Adverse action: means an increase in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount of, any personal insurance, existing or applied for. See Michigan Laws 500.2151
- Consumer reporting agency: means any person that, for monetary fees or 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 Michigan Laws 500.2151
- 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 Michigan Laws 500.2151
- 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 credit worthiness, 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 in the rating of personal insurance. See Michigan Laws 500.2151
- 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 Michigan Laws 500.2151
- Insurer: means an individual, corporation, association, partnership, reciprocal exchange, inter-insurer, Lloyds organization, fraternal benefit society, or other legal entity, engaged or attempting to engage in the business of making insurance or surety contracts. See Michigan Laws 500.106
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Personal insurance: means property/casualty insurance written for personal, family, or household use, including automobile, home, motorcycle, mobile home, noncommercial dwelling fire, boat, personal watercraft, snowmobile, and recreational vehicle, whether written on an individual, group, franchise, blanket policy, or similar basis. See Michigan Laws 500.2151
- Rate: means the cost of insurance per payroll before adjustment for an individual insured's size, exposure, or loss experience. See Michigan Laws 500.2402
- shall not apply: means that the pertinent provision is not operative as to certain persons or things or in conjunction with a particular date or dates. See Michigan Laws 8.4c
- state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories belonging to the United States; and the words "United States" shall be construed to include the district and territories. See Michigan Laws 8.3o
An insurer shall not use credit information or an insurance score as any part of a decision to deny, cancel, or nonrenew a personal insurance policy under chapters 21, 24, and 26. However, credit information and an insurance score may be used to determine premium installment payment options and availability. An insurer shall not apply credit information or a credit-based insurance score that is otherwise permitted under this act unless all of the following are met:
(a) The insurer or its producer discloses, either on the insurance application or at the time the application is taken, that it may obtain credit information in connection with the application. This disclosure shall be either written or provided to an applicant in the same medium as the application for insurance. An insurer may use the following disclosure statement:
“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.”.
(b) The insurer or a third party on behalf of the insurer does not use income, gender, address, zip code, ethnic group, religion, marital status, or nationality of the insured or insurance applicant in calculating an insurance score.
(c) The insurer does not take an adverse action against a consumer because he or she does not have a credit card account. However, an insurer may take an adverse action against that insured if it is based on any other applicable factor that is independent of the fact that the consumer does not have a credit card account.
(d) The insurer or a third party on behalf of the insurer does not consider an absence of credit information or an inability to calculate an insurance score in the rating of personal insurance unless any resulting rate differential is filed with and not disapproved by the office of financial and insurance regulation. The office of financial and insurance regulation shall not disapprove a filing under this subdivision if it meets 1 of the following:
(i) Is reasonably justified by differences in losses, expenses, or both.
(ii) Provides the insured or insurance applicant with a discount that is not less, on average, than the average credit based discount received by the insurer’s insureds in this state.
(e) The insurer or a third party on the insurer’s behalf uses a credit report issued within 90 days before the date an insurance score based on that credit report is first applied to the insured.
(f) Upon the insured’s request or with the insured’s permission the insured’s producer’s request at annual renewal, or upon the insured’s request during the course of the policy, an insurer or a third party on the insurer’s behalf shall obtain a new credit report or insurance score and rerate the insured. An insurer or a third party on the insurer’s behalf is not required to obtain a new credit report or recalculate the insurance score more frequently than once in a 12-month period. An insurer or a third party on the insurer’s behalf may order a credit report upon any renewal if the insurer does so using a consistent methodology with all its insureds.
(g) For insurance scores calculated or recalculated on or after the effective date of the amendatory act that added this section, the insurer or a third party on the insurer’s behalf does not use the following as a negative factor in any insurance score or in reviewing credit information:
(i) Credit inquiries not initiated by the consumer or requested by the consumer for his or her own credit information.
(ii) Credit inquiries relating to insurance coverage, if so identified on an insured’s or insurance applicant’s credit report.
(iii) Multiple lender inquiries, if coded by the consumer reporting agency on the credit report as being from the home mortgage industry and made within 30 days of one another, unless only 1 inquiry is considered.
(iv) Multiple lender inquiries, if coded by the consumer reporting agency on the credit report as being from the automobile lending industry and made within 30 days of one another, unless only 1 inquiry is considered.
(v) Collection accounts with a medical industry code, if so identified on the consumer’s credit report.