Prohibit Auto Insurance Discrimination Act

I 116TH CONGRESS 1ST SESSION H. R. 3693 To prohibit private passenger automobile insurers from using certain income proxies to determine insurance rates and eligibility. IN THE HOUSE OF REPRESENTATIVES JULY 10, 2019 Mrs. WATSON COLEMAN (for herself, Ms. TLAIB, Ms. BASS, Mr. BUTTERFIELD, Mr. BISHOP of Georgia, Ms. FUDGE, Ms. JOHNSON of Texas, Ms. PRESSLEY, Ms. NORTON, Ms. OMAR, Mr. THOMPSON of Mis- sissippi, Ms. KELLY of Illinois, and Ms. OCASIO-CORTEZ) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consider- ation of such provisions as fall within the jurisdiction of the committee concerned A BILL To prohibit private passenger automobile insurers from using certain income proxies to determine insurance rates and eligibility. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Prohibit Auto Insur- 4 ance Discrimination Act’’. 5 VerDate Sep 11 2014 00:18 Jul 20, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3693.IH H3693 kjohnson on DSK79L0C42 with BILLS 2 •HR 3693 IH SEC. 2. FINDINGS. 1 Congress finds the following: 2 (1) Private passenger automobile insurance 3 companies are institutions which help spread risk of 4 loss over a collective group of policyholders. 5 (2) Private passenger automobile insurance is 6 mandated in all States but New Hampshire. Legal 7 penalties for operating a vehicle without liability in- 8 surance in these States range from fines, to license 9 suspensions or revocations, to imprisonment. 10 (3) The private passenger automobile insurance 11 industry uses different variables to predict the over- 12 all costs and risks of drivers. The analysis and use 13 of these variables ultimately help the automobile in- 14 surer set premium rates charged to consumers which 15 the automobile insurer determines to be actuarially 16 supported. 17 (4) A pure loss ratio, a measurement of profit- 18 ability in insurance, is defined as losses divided by 19 premiums. Statistical correlations between certain 20 variables and pure loss ratios should be interpreted 21 to mean that the selected variable relates to profit- 22 ability, but not necessarily to the risk that an indi- 23 vidual will get into an automobile accident. 24 (5) A growing trend in the private passenger 25 automobile insurance industry is to use income prox- 26 VerDate Sep 11 2014 00:18 Jul 20, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3693.IH H3693 kjohnson on DSK79L0C42 with BILLS 3 •HR 3693 IH ies for underwriting and rating. The use of income 1 proxies such as a driver’s education level, occupa- 2 tion, employment status, home ownership status, 3 credit score, consumer report, previous insurer, and 4 prior purchase of insurance by the industry as vari- 5 ables that significantly influence the insurance pre- 6 miums charged to drivers has become commonplace. 7 Use of these income proxies in this fashion results 8 in higher rates being charged to lower income driv- 9 ers while lower rates are being charged to the more 10 affluent driver. 11 (6) The American public is largely unaware 12 that a person’s education level, occupation, employ- 13 ment status, home ownership status, credit score, 14 consumer report, zip code, census tract, previous in- 15 surer, and prior purchase of insurance may be sig- 16 nificant factors used to determine eligibility for pre- 17 ferred auto insurance rates regardless of the per- 18 son’s driving history. As a result of the individual’s 19 ineligibility for preferred rates, the driver’s policy 20 and rate will be only offered from an affiliate com- 21 pany that has higher rates. 22 VerDate Sep 11 2014 00:18 Jul 20, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3693.IH H3693 kjohnson on DSK79L0C42 with BILLS 4 •HR 3693 IH SEC. 3. REQUIREMENTS FOR PRIVATE PASSENGER AUTO- 1 MOBILE INSURERS. 2 (a) USE OF CERTAIN FACTORS AND INCOME PROX- 3 IES PROHIBITED.—It shall be unlawful for a private pas- 4 senger automobile insurer, or any of its affiliate insurers, 5 to take into consideration any of the factors described in 6 subsection (b) relating to a consumer in determining that 7 consumer’s eligibility for automobile insurance or in calcu- 8 lating the rate for that consumer. 9 (b) FACTORS.—The factors referred to in subsection 10 (a) are— 11 (1) gender; 12 (2) level of education; 13 (3) occupation; 14 (4) employment status; 15 (5) home ownership status; 16 (6) zip code or adjacent zip codes; 17 (7) census tract; 18 (8) marital status; 19 (9) credit score or credit-based insurance score; 20 (10) consumer report; 21 (11) previous insurer; or 22 (12) prior purchase of insurance of a consumer 23 from that automobile insurer. 24 (c) PUBLIC AVAILABILITY OF INFORMATION.—All 25 underwriting rules and rate filings for use by any private 26 VerDate Sep 11 2014 00:18 Jul 20, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3693.IH H3693 kjohnson on DSK79L0C42 with BILLS 5 •HR 3693 IH passenger automobile insurer shall be available for public 1 inspection and may not be considered proprietary trade 2 secret information. 3 (d) REASONABLE PROCEDURES TO ASSURE COMPLI- 4 ANCE.—No person shall be held liable for any violation 5 of this Act if the person shows by a preponderance of the 6 evidence that at the time of the alleged violation the per- 7 son maintained reasonable procedures to assure compli- 8 ance with the provisions of this Act. 9 (e) RULES OF CONSTRUCTION.— 10 (1) FACTORS AND METHODS INFLUENCING 11 PREMIUMS.—For the purposes of this Act, a viola- 12 tion of subsection (a) shall be considered to have oc- 13 curred whenever the consideration of any of the fac- 14 tors described in subsection (b) prevents the con- 15 sumer from obtaining insurance at the lowest rate 16 available to the consumer from a private passenger 17 automobile insurer or any of its affiliates. Actions 18 considered a violation of such subsection include the 19 usage or consideration of any such factor resulting 20 in— 21 (A) the determination of a consumer’s eli- 22 gibility for automobile insurance or the calcula- 23 tion of the rate for that consumer; 24 VerDate Sep 11 2014 00:18 Jul 20, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3693.IH H3693 kjohnson on DSK79L0C42 with BILLS 6 •HR 3693 IH (B) an action which prevents a consumer 1 from receiving certain rebates or discounts; 2 (C) an action which prevents a consumer 3 from obtaining insurance from an automobile 4 insurer or any of its affiliate companies; 5 (D) a denial, cancellation, non-renewal, or 6 change in policy or coverage terms; or 7 (E) any other impact on a consumer’s pre- 8 mium for insurance. 9 (2) AUTHORITY OF FEDERAL AND STATE AGEN- 10 CIES.—Nothing in this Act is intended to affect the 11 authority of any Federal or State agency to enforce 12 a prohibition against unfair or deceptive acts or 13 practices, including the making of false or mis- 14 leading statements in connection with a credit or in- 15 surance transaction that is not initiated by the con- 16 sumer. 17 SEC. 4. ENFORCEMENT. 18 (a) ENFORCEMENT BY FEDERAL TRADE COMMIS- 19 SION.— 20 (1) UNFAIR OR DECEPTIVE ACTS OR PRAC- 21 TICES.—A violation of this Act shall be treated as 22 an unfair and deceptive act or practice proscribed 23 under section 5 of the Federal Trade Commission 24 Act (15 U.S.C. 57a(a)(1)(B)). 25 VerDate Sep 11 2014 00:18 Jul 20, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3693.IH H3693 kjohnson on DSK79L0C42 with BILLS 7 •HR 3693 IH (2) POWERS OF COMMISSION.—The Federal 1 Trade Commission shall enforce this Act in the same 2 manner, by the same means, and with the same ju- 3 risdiction, powers, and duties as though all applica- 4 ble terms and provisions of the Federal Trade Com- 5 mission Act (15 U.S.C. 41 et seq.) were incor- 6 porated into and made a part of this Act. Any per- 7 son who violates this Act shall be subject to the pen- 8 alties and entitled to the privileges and immunities 9 provided in the Federal Trade Commission Act. 10 (3) AMOUNT OF PENALTY.—Notwithstanding 11 the penalties set forth in section 5 of such Act, a 12 person who violates this Act shall be liable for a civil 13 penalty of not less than $2,500 per violation. 14 (4) REGULATIONS.—The Federal Trade Com- 15 mission shall prescribe, in accordance with section 16 553 of title 5, United States Code, such regulations 17 as are necessary to carry out the purposes of this 18 Act, including regulations as may be necessary or 19 appropriate to administer and carry out the pur- 20 poses and objectives of this Act, and to prevent eva- 21 sions thereof or to facilitate compliance therewith. 22 (b) ACTIONS BY CONSUMERS.— 23 (1) WILLFUL VIOLATIONS.—Any private pas- 24 senger automobile insurer who willfully violates this 25 VerDate Sep 11 2014 00:18 Jul 20, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3693.IH H3693 kjohnson on DSK79L0C42 with BILLS 8 •HR 3693 IH Act with respect to any consumer is liable to that 1 consumer in an amount equal to the sum of— 2 (A) any actual damages sustained by the 3 consumer as a result of the failure; 4 (B) such amount of punitive damages as 5 the court may allow; and 6 (C) in the case of any successful action to 7 enforce any liability under this paragraph, the 8 costs of the action together with reasonable at- 9 torneys’ fees as determined by the court. 10 (2) NEGLIGENT VIOLATIONS.—Any private pas- 11 senger automobile insurer who is negligent in failing 12 to comply with any requirement imposed under this 13 Act with respect to any consumer is liable to that 14 consumer in an amount equal to the sum of— 15 (A) any actual damages sustained by the 16 consumer as a result of the failure; and 17 (B) in the case of any successful action to 18 enforce any liability under this paragraph, the 19 costs of the action together with reasonable at- 20 torneys’ fees as determined by the court. 21 (3) ATTORNEYS’ FEES.—Upon a finding by the 22 court that an unsuccessful pleading, motion, or other 23 paper filed in connection with an action under this 24 subsection was filed in bad faith or for purposes of 25 VerDate Sep 11 2014 00:18 Jul 20, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3693.IH H3693 kjohnson on DSK79L0C42 with BILLS 9 •HR 3693 IH harassment, the court shall award to the prevailing 1 party attorney’s fees reasonable in relation to the 2 work expended in responding to the pleading, mo- 3 tion, or other paper. 4 (4) JURISDICTION OF COURTS; LIMITATION OF 5 ACTIONS.—An action to enforce any liability created 6 under this subsection may be brought in any appro- 7 priate United States district court, without regard to 8 the amount in controversy, or in any other court of 9 competent jurisdiction, not later than the earlier 10 of— 11 (A) 2 years after the date of discovery by 12 the plaintiff of the violation that is the basis for 13 such liability; or 14 (B) 5 years after the date on which the 15 violation that is the basis for such liability oc- 16 curs. 17 (c) ACTIONS BY STATES.— 18 (1) IN GENERAL.—In any case in which the at- 19 torney general of a State, or an official or agency of 20 a State, has reason to believe that an interest of the 21 residents of such State has been or is threatened or 22 adversely affected by an act or practice in violation 23 of this Act, the State, as parens patriae, may bring 24 a civil action on behalf of the residents of the State 25 VerDate Sep 11 2014 00:18 Jul 20, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3693.IH H3693 kjohnson on DSK79L0C42 with BILLS 10 •HR 3693 IH in an appropriate State court or an appropriate dis- 1 trict court of the United States to— 2 (A) enjoin such act or practice; 3 (B) enforce compliance with this Act; 4 (C) obtain damages, restitution, or other 5 compensation on behalf of residents of the 6 State; or 7 (D) obtain such other legal and equitable 8 relief as the court may consider to be appro- 9 priate. 10 (2) NOTICE.—Before filing an action under this 11 subsection, the attorney general, official, or agency 12 of the State involved shall provide to the Federal 13 Trade Commission a written notice of such action 14 and a copy of the complaint for such action. If the 15 attorney general, official, or agency determines that 16 it is not feasible to provide the notice described in 17 this paragraph before the filing of the action, the at- 18 torney general, official, or agency shall provide writ- 19 ten notice of the action and a copy of the complaint 20 to the Federal Trade Commission immediately upon 21 the filing of the action. 22 (3) AUTHORITY OF FEDERAL TRADE COMMIS- 23 SION.—On receiving notice under paragraph (2) of 24 VerDate Sep 11 2014 00:18 Jul 20, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3693.IH H3693 kjohnson on DSK79L0C42 with BILLS 11 •HR 3693 IH an action under this subsection, the Federal Trade 1 Commission shall have the right— 2 (A) to intervene in the action; 3 (B) upon so intervening, to be heard on all 4 matters arising therein; and 5 (C) to file petitions for appeal. 6 (4) RULE OF CONSTRUCTION.—For purposes of 7 bringing a civil action under this subsection, nothing 8 in this Act shall be construed to prevent an attorney 9 general, official, or agency of a State from exercising 10 the powers conferred on the attorney general, offi- 11 cial, or agency by the laws of such State to conduct 12 investigations, administer oaths and affirmations, or 13 compel the attendance of witnesses or the production 14 of documentary and other evidence. 15 SEC. 5. RELATION TO STATE LAW. 16 This Act does not annul, alter, affect, or exempt any 17 person subject to the provisions of this Act from complying 18 with the laws of any State with respect to the collection, 19 distribution, or use of any information on consumers, the 20 prevention or mitigation of identity theft, or the regulation 21 of the business of insurance, except to the extent that 22 those laws are inconsistent with any provision of this Act, 23 and then only to the extent of the inconsistency. 24 VerDate Sep 11 2014 00:18 Jul 20, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3693.IH H3693 kjohnson on DSK79L0C42 with BILLS 12 •HR 3693 IH SEC. 6. DEFINITIONS. 1 For the purposes of this Act, the following definitions 2 apply: 3 (1) AFFILIATE.—The term ‘‘affiliate’’ means an 4 entity that, directly or indirectly, through one or 5 more intermediaries, [Text truncated for display. Full text available on Congress.gov.]