§ 10-4-116 — Use of credit information

(1) An insurer that offers personal lines
of property and casualty insurance shall not:

(a) Use an insurance score that is calculated using income, gender, address,
United States postal zip code, ethnic group, religion, marital status, or nationality of
the consumer;

(b) Deny, cancel, or fail to renew a policy of personal lines of property and
casualty insurance on the basis of credit information, without consideration of any
other applicable underwriting factor that is independent of credit information
prohibited pursuant to paragraph (a) of this subsection (1);

(c) Base an insured's renewal rates for personal lines of property and
casualty insurance upon credit information, without consideration of any other
applicable factor independent of credit information;

(d) Take an adverse action against a consumer because he or she does not
have a credit card account, without consideration of any other applicable factor
independent of credit information;

(e) Consider an absence of credit information or an inability to calculate an
insurance score in underwriting or rating personal lines of property and casualty
insurance issued in this state, unless the insurer does one of the following:

(I) Treats the consumer in a manner otherwise approved by the
commissioner, if the insurer presents information that such an absence or inability
relates to the risk for the insurer;

(II) Treats the consumer as if he or she had neutral credit information, as
defined by the insurer; or

(III) Excludes the use of credit information as a factor and uses only other
underwriting criteria;

(f) Take an adverse action against a consumer based on credit information,
unless the insurer obtains and uses a credit report issued or an insurance score
calculated within ninety days before the date the policy is first written or renewal is
issued;

(g) Use credit information unless, not later than every thirty-six months
following the last time that the insurer obtained current information for the
consumer, the insurer recalculates the consumer's insurance score or obtains an
updated credit report. Notwithstanding any provision of this section to the contrary,
an insurer:

(I) At annual renewal, upon the request of a consumer or the consumer's
agent, shall reunderwrite and rerate the policy based upon a current credit report
or insurance score. An insurer may recalculate the insurance score or obtain the
updated credit report of a consumer more frequently than once during a twelve-month period.

(II) May obtain current credit information upon a renewal before the thirty-sixth month of coverage, if obtaining current credit information is consistent with
the insurer's underwriting guidelines;

(III) Notwithstanding subparagraph (I) of this paragraph (g), need not obtain
current credit information for an insured if one of the following situations apply:

(A) The insurer is treating the insured in a manner otherwise approved by the
commissioner;

(B) The insured is in the most-favorably-priced tier of the insurer, within a
group of affiliated insurers; except that the insurer may order a credit report if
ordering the credit report is consistent with its underwriting guidelines;

(C) Credit was not used for underwriting or rating the insured when the
insured's initial policy of insurance was written; except that an insurer may use
credit for underwriting or rating the insured upon renewal if the use of credit is
consistent with its underwriting guidelines; or

(D) The insurer reevaluates the insured beginning no later than thirty-six
months after inception and thereafter based upon other underwriting or rating
factors, excluding credit information.

(h) Use the following as a negative factor in an insurance scoring
methodology or in reviewing credit information for the purpose of underwriting or
rating a policy of personal lines of property and casualty insurance:

(I) Credit inquiries not initiated by the consumer or inquiries requested by the
consumer for his or her own credit information;

(II) Inquiries relating to insurance coverage, if so identified on a consumer's
credit report;

(III) Collection accounts with a medical industry code, if so identified on the
consumer's credit report;

(IV) Multiple lender inquiries, if coded by the consumer reporting agency on
the consumer's credit report as being from the motor vehicle lending industry and
made within thirty days after one another, unless only one inquiry is considered;

(V) 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 days of one another, unless only one inquiry is considered;

(VI) Identity theft that may be sufficiently and independently corroborated;

(VII) Credit information adversely impacted by a dissolution of marriage or by
the credit information of a former spouse.

(2) If it is determined through the dispute resolution process as set forth in
the federal Fair Credit Reporting Act, 15 U.S.C. sec. 1681i (a)(5), that the credit
information of a current insured was incorrect or incomplete and if the insurer
receives notice of a determination from either the consumer reporting agency or
from the insured, the insurer shall reunderwrite and rerate the consumer within
thirty days after receiving the notice. After reunderwriting or rerating the insured,
the insurer shall make any adjustments necessary, consistent with its underwriting
and rating guidelines. If an insurer determines that the insured has overpaid a
premium, the insurer shall refund to the insured the amount of overpayment
calculated back to the shorter of either the last twelve months of coverage or the
actual policy period.

(3) (a) If an insurer offering personal lines of property and casualty coverage
uses credit information in underwriting or rating a consumer, the insurer or the
producer shall disclose, either on the insurance application or at the time the
insurance application is taken, that it may obtain credit information in connection
with such application. The disclosure shall be either in writing or in the same
medium as the application for insurance is taken. The insurer may provide the
disclosure statement required pursuant to this subsection (3) to an insured on a
renewal policy, if the consumer has previously been provided a copy of the
disclosure statement.

(b) Use of the following disclosure statement shall constitute compliance
with the provisions of this subsection (3); except that an insurer may use different
terms or phrases to communicate the same meaning:

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.

(4) If an insurer takes an adverse action based upon credit information, the
insurer shall meet the notice requirements of this subsection (4). Specifically, an
insurer shall:

(a) Provide notification to the consumer that an adverse action has been
taken, in accordance with the requirements of the federal Fair Credit Reporting
Act, 15 U.S.C. sec. 1681m (a); and

(b) Provide notification to the consumer explaining the reason for the
adverse action. The reasons shall be provided in sufficiently clear and specific
language so that a person may identify the basis for the insurer's decision to take
adverse action. The notification shall include a description of up to four factors that
were the primary influences of the adverse action. The use of generalized terms
such as poor credit history, poor credit rating, or poor insurance score does
not meet the explanation requirements of this subsection (4). Standardized credit
explanations provided by consumer reporting agencies or other third-party vendors
are deemed to comply with this subsection (4).

(5) An insurer that uses insurance scores to underwrite and rate risk shall
file its scoring models or other scoring processes with the commissioner. A third
party may file scoring models on behalf of an insurer. A filing that includes
insurance scoring may include loss experience justifying the use of credit
information. The insurer may request that information requested pursuant to this
subsection (5) not be open to public inspection or considered an open record
pursuant to article 72 of title 24, C.R.S.

(6) An insurer shall indemnify, defend, and hold a producer harmless against
all liability, fees, and costs arising out of or relating to the actions, errors, or
omissions of the producer who obtains or uses credit information or insurance
scores for an insurer, so long as the producer follows the instructions of or
procedures established by the insurer and complies with any applicable law or rule.
Nothing in this section shall be construed to provide a consumer or insured with a
cause of action that does not exist in the absence of this section.

(7) (a) A consumer reporting agency shall not provide or sell data or lists that
include information that, in whole or in part, was submitted in conjunction with an
insurance inquiry about a consumer's credit information or a request for a credit
report or insurance score. Information that may not be provided or sold includes,
but is not limited to, the expiration dates of an insurance policy or other information
that may identify periods in which a consumer's insurance may expire and the terms
and conditions of the consumer's insurance coverage.

(b) The restrictions provided in paragraph (a) of this subsection (7) shall not
apply to data or lists the consumer reporting agency supplies to the insurance
producer from whom information was received, the insurer on behalf of whom the
producer acted, or such insurer's affiliates or holding companies.

(c) Nothing in this subsection (7) shall be construed to restrict an insurer
from being able to obtain a claims history report or a motor vehicle report.

(8) For the purposes of this section, unless the context otherwise requires:

(a) Adverse action means a denial or cancellation of, an increase in any
charge for, or a reduction or other unfavorable change in the terms of coverage or
amount of any insurance existing or applied for in connection with the underwriting
of personal lines of property and casualty insurance coverages.

(b) Affiliate means a company that controls, is controlled by, or is under
common control with another insurer.

(c) Applicant means a person who has applied to be covered under a policy
of personal lines of property and casualty insurance.

(d) Beneficiary or claimant includes an insured person and a third-party
claimant.

(e) Consumer means an insured whose credit information is used or whose
insurance score is calculated in the underwriting or rating of personal lines of
property and casualty insurance or an application for personal lines of property and
casualty insurance coverage.

(f) Consumer reporting agency shall have the same meaning as in section
5-16-103 (6).

(g) Credit information means credit-related information derived from a
credit report itself or provided on an application for personal lines of property and
casualty insurance. Information that is not credit-related shall not be considered
credit information regardless of whether it is contained in a credit report or in an
application or is used to calculate an insurance score.

(h) Credit report means a 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 lines of property and casualty insurance premiums, eligibility
for coverage, or tier placement.

(i) 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 purpose of predicting the future insurance loss
exposure of an individual applicant or insured.

Legislative History

Source: L. 2004: Entire section added, p. 1974, � 1, effective January 1, 2005. L. 2017: (8)(f) amended, (HB 17-1238), ch. 260, p. 1172, � 15, effective August 9.