HOUSE BILL 973

47th legislature - STATE OF NEW MEXICO - first session, 2005

INTRODUCED BY

Mimi Stewart

AN ACT

RELATING TO INSURANCE; PROHIBITING CERTAIN ACTIONS BY INSURERS OF PERSONAL INSURANCE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     Section 1. A new section of Chapter 59A, Article 16 NMSA 1978 is enacted to read:

     "[NEW MATERIAL] USE OF CREDIT INFORMATION--LIMITS ON USE.--

          A. An insurer authorized to do business in New Mexico shall not:

                (1) deny, cancel or not renew 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 law;

                (2) base an insured's renewal rates for personal insurance solely upon credit information without consideration of any other applicable factor independent of credit information;  

                (3) take an adverse action against a person solely because the person does not have a credit card account without consideration of any other applicable factor independent of credit information; or

                (4) consider an absence of credit information or an inability to calculate an insurance score in underwriting or rating personal insurance, unless the insurer:

                     (a) treats the person as otherwise approved by the superintendent and the insurer presents information that such an absence or inability relates to the risk for the insurer;

                     (b) treats the person as if the applicant or insured had neutral credit information; or

                     (c) excludes the use of credit information as a factor and uses only other underwriting criteria.

          B. As used in this section:

                (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) "credit information" means any credit-related information derived from a credit report, found on a credit report itself or otherwise provided;

                (3) "credit report" means a written, oral or other communication of information by a consumer reporting agency bearing on a person'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;

                (4) "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; and

                (5) "personal insurance" means private passenger automobile, homeowners', renter's, umbrella, motorcycle, mobile-homeowners', boat, personal watercraft, snowmobile, recreational vehicle and noncommercial dwelling fire insurance polices. Such policies must be individually underwritten for personal, family or household use."

     Section 2. APPLICABILITY.--The provisions of this 2005 act apply to personal insurance policies written to be effective or renewed on or after January 1, 2006.

     Section 3. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2005.

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