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H.B. 221






Sponsor: Peggy Wallace

             7      LONG TITLE
             8      General Description:
             9          This bill amends the Insurance Code to prohibit use of credit information for certain
             10      insurance purposes.
             11      Highlighted Provisions:
             12          This bill:
             13          .    prohibits use of credit information for any purpose related to personal lines
             14      insurance; and
             15          .    repeals existing provisions addressing credit information.
             16      Monies Appropriated in this Bill:
             17          None
             18      Other Special Clauses:
             19          This bill takes effect on July 1, 2004.
             20      Utah Code Sections Affected:
             21      ENACTS:
             22          31A-22-1308, Utah Code Annotated 1953
             23      REPEALS:
             24          31A-22-320, as enacted by Chapter 221, Laws of Utah 2002
             25          31A-22-1307, as enacted by Chapter 105, Laws of Utah 1997
             27      Be it enacted by the Legislature of the state of Utah:

             28          Section 1. Section 31A-22-1308 is enacted to read:
             29          31A-22-1308. Use of credit information prohibited for personal lines insurance.
             30          (1) As used in this section:
             31          (a) "Credit information" means:
             32          (i) a consumer report;
             33          (ii) a consumer score;
             34          (iii) any information obtained by the insurer from a consumer report;
             35          (iv) any part of a consumer report; or
             36          (v) any part of a credit score.
             37          (b) "Consumer report" is as defined in 15 U.S.C. 1681a.
             38          (c) (i) "Credit score" means a numerical value, a categorization, or classification that is:
             39          (A) derived from information in a consumer report;
             40          (B) derived from a statistical tool or modeling system; and
             41          (C) developed to predict the likelihood of:
             42          (I) future insurance claims; or
             43          (II) credit behavior.
             44          (ii) "Credit score" includes:
             45          (A) a risk predictor; or
             46          (B) a risk score.
             47          (iii) A numerical value, categorization, or classification described in Subsection
             48      (1)(c)(i) is a credit score if it is developed to predict future insurance claims or credit behavior
             49      regardless of whether it is developed to predict other factors in addition to predicting future
             50      insurance claims or credit behavior.
             51          (2) An insurer may not use credit information in whole or in part for any purpose
             52      related to personal lines insurance.
             53          Section 2. Repealer.
             54          This bill repeals:
             55          Section 31A-22-320, Use of credit information.
             56          Section 31A-22-1307, Use of consumer reports by residential dwelling liability
             57      insurers.
             58          Section 3. Effective date.

             59          This bill takes effect on July 1, 2004.

Legislative Review Note
    as of 1-14-04 3:48 PM

This bill prohibits the use of credit information for any purpose related to personal lines
insurance. Because the federal Fair Credit Reporting Act (FCRA) permits a credit agency to
provide credit reports to persons who intend to use the information in connection with the
underwriting of insurance and addresses insurance transactions not initiated by the consumer,
this bill might be challenged as being preempted by the FCRA. The FCRA provides that it
does not annul, alter, affect, or exempt any person from complying with state law with respect
to the collection, distribution, or use of any information, except to the extent that the state law
is inconsistent with the FCRA. The FCRA then expressly prohibits certain state laws. In
reviewing this bill it would be for a court to decide whether FCRA expressly preempts this bill
or whether this bill is consistent with the FCRA.

Office of Legislative Research and General Counsel

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