[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 182 Introduced in House (IH)]







104th CONGRESS
  1st Session
                                H. R. 182

    To provide for disclosures for insurance in interstate commerce.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 4, 1995

 Mrs. Collins introduced the following bill; which was referred to the 
                         Committee on Commerce

_______________________________________________________________________

                                 A BILL


 
    To provide for disclosures for insurance in interstate commerce.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Anti Redlining in Insurance 
Disclosure Act''.

SEC. 2. FINDINGS AND CONSTRUCTION.

    (a) Findings.--The Congress finds that--
            (1) there are disparities in property and casualty 
        insurance coverage provided by some insurers engaged in 
        interstate commerce between areas of different incomes and 
        racial composition,
            (2) such disparities adversely affect insurance in 
        interstate commerce and the affordability and availability of 
        insurance for consumers, and
            (3) disclosures of insurance activities of insurers would 
        benefit consumers and insurance regulators without imposing any 
        undue burden on insurers.
    (b) Construction.--Nothing in this Act is intended to, nor shall it 
be construed to, encourage unsound underwriting practices.

SEC. 3. MAINTENANCE OF INFORMATION AND PUBLIC DISCLOSURE.

    (a) General Rule.--
            (1) Designated insurers.--Except as provided by subsection 
        (b)(5), each insurer designated by the Secretary, which sells a 
        line of insurance designated by the Secretary in a Metropolitan 
        Statistical Area or Consolidated Metropolitan Statistical Area, 
        as designated by the Secretary (both hereafter in this Act 
        referred to as a ``MSA''), shall compile and make available for 
        each calendar year to the Secretary in accordance with 
        subsection (d) and regulations of the Secretary and to the 
        public for inspection and copying at the home office or at a 
        central depository established under subsection (c) and at 
        least one branch office (if there is one) within such 
        designated MSA--
                    (A) the number and total coverage amount of 
                insurance policies by line designated by the Secretary 
                which were issued or for which the insurer received a 
                completed application in such designated MSA, and
                    (B) the number of agents of such insurer whose 
                principal place of business is located in such 
                designated MSA and the number within each census tract 
                or county, as applicable, in such designated MSA and 
                with respect to each such agent, whether such agent is 
                an employee, independent contractor working exclusively 
                for such insurer, or an independent contractor 
                appointed to represent such insurer on a non-exclusive 
                basis.
            (2) Non-designated insurers.--Except as provided in 
        subsection (b)(5), every insurer which sells an insurance 
        policy in a designated line of insurance in a designated MSA 
        and which is not a designated insurer in such MSA shall report 
        for each calendar year to the Secretary in accordance with 
        subsection (d) and regulations of the Secretary the number of 
        insurance policies in a designated line sold in such MSA on an 
        annualized basis which adjusts for varying durations of 
        insurance policies sold--
                    (A) itemized by census tract for policies sold 
                within any county with a population of more than 30,000 
                within the designated MSA, or
                    (B) by county for insurance policies sold within 
                any other county in such MSA.
        Such information shall be made available to the public on a 
        timetable determined by the Secretary but not later than 
        December 31 of the calendar year following the calendar year 
        for which the information is required to be reported.
    (b) Requirements.--
            (1) Content.--The information required to be maintained and 
        made available under subsection (a)(1) shall--
                    (A) be itemized in order to clearly and 
                conspicuously disclose the number and coverage amount 
                for each line of insurance for which information is 
                required by--
                            (i) census tracts for insurance policies 
                        within any county with a population of more 
                        than 30,000 within the designated MSA, or
                            (ii) county for insurance policies within 
                        any other county within such designated MSA,
                    (B) disclose for each designated line of insurance 
                in a designated MSA and, with respect to each such 
                line, for each census tract or county, as applicable, 
                in the designated MSA--
                            (i) the total number of claims made which 
                        with respect to property insurance shall be 
                        disaggregated by the type and use of the 
                        property insured, and
                            (ii) the total amount paid in claims which 
                        with respect to property insurance shall be 
                        disaggregated by the type and use of the 
                        property insured,
                    (C) disclose the standards and criteria used in 
                underwriting each designated line of insurance, and
                    (D) be made available to the public on a timetable 
                determined by the Secretary but not later than December 
                31 of the calendar year following the calendar year for 
                which the information is required to be made available.
            (2) Itemization of data.--With respect to insurance for 
        which information is required to be maintained and made 
        available under subsection (a)(1), the following information 
        shall be maintained and made available for each completed 
        application and for each policy:
                    (A) The designated MSA for which such insurance is 
                issued and within such MSA the census tract or county, 
                as applicable, for which such insurance is issued.
                    (B) The designated insurer who issued such 
                insurance.
                    (C) The date of the issuance of such insurance.
                    (D) The line of the insurance which is designated 
                and any subline or class of such insurance.
                    (E) The type of insurance or policy form for which 
                applications are made and the types of insurance and 
                policy forms which are issued.
                    (F) The amount of coverage provided under such 
                insurance and any applicable deductibles.
                    (G) The amount of the premiums for such insurance.
                    (H) The durations of such insurance.
                    (I) A notation if such insurance was issued in a 
                voluntary or residual market.
                    (J) The reason for any declination, cancellation, 
                or non-renewal made for such insurance.
                    (K) With respect to property insurance, the market 
                value of the property insured and the type and use of 
                property insured.
            (3) Period of maintenance.--Any information required to be 
        compiled and made available under subsection (a) shall be 
        maintained and made available for a period of 5 years after the 
        close of the first year during which such information is 
        required to be maintained and made available.
            (4) Format for disclosures.--Subject to subsection (c), the 
        Secretary shall prescribe a standard format for making 
        information available as required by subsection (a). Such 
        format shall encourage the submission of information in a form 
        readable by a computer.
            (5) Exemption.--
                    (A) Secretarial action.--The Secretary may by 
                regulation exempt from the requirements of subsection 
                (a) any insurer within any State if the Secretary 
                determines that under the laws of such State that such 
                insurer is subject to disclosure requirements on a 
                census tract basis substantially similar to those of 
                subsection (a) and that such law contains adequate 
                provisions for enforcement.
                    (B) United states program.--Reporting shall not be 
                required under subsection (a) with respect to insurance 
                provided by a program underwritten or administered by 
                the United States.
            (6) Completed application.--For purposes of subsection (a) 
        and this subsection, the Secretary shall define ``completed 
        applications'' to--
                    (A) ensure that the disclosure required by such 
                subsections appropriately reflects the characteristics 
                of the applicants interested in purchasing insurance in 
                a designated MSA, and
                    (B) prevent insurers from evading the intent of 
                such subsections through practices designed to 
                discourage applicants from completing applications.
    (c) Access System.--The Secretary, shall implement a system to 
facilitate access to information required to be maintained and made 
available under subsection (a). Such system shall include arrangements 
for a central depository of information in each designated MSA and for 
a telephone number which can be used by the public, at cost, to request 
such information. Statements shall be made available to the public for 
inspection and copying at such central depository of information for 
all designated insurers within such MSA.
    (d) Submission to Secretary.--The information referred to in 
subsection (a) shall be submitted to the Secretary. The Secretary shall 
develop regulations prescribing--
            (1) the format for making such information available,
            (2) the method for submission of such information, and
            (3) the procedures for making the information available to 
        the public.
Any reporting insurer may submit in writing to the Secretary such 
additional data or explanations as it deems relevant to the decision by 
such insurer to sell insurance.

SEC. 4. DESIGNATIONS.

    (a) Designations by the Secretary.--
            (1) Designations of msa's.--The Secretary shall, on an 
        annual basis, designate the MSA's for which reporting is 
        required under section 3. At a minimum, the Secretary shall 
        designate the 150 MSA's having the largest population. The 
        Secretary may designate additional MSA's on the basis of such 
        criteria as the Secretary may by rule develop. Such a rule 
        shall be issued in accordance with section 553 of title 5, 
        United States Code.
            (2) Designation of insurers.--For each MSA designated under 
        paragraph (1), the Secretary shall take the following actions:
                    (A) The Secretary shall annually designate the 
                insurers transacting insurance business in such MSA for 
                which reporting is required under section 3. At a 
                minimum, the Secretary shall annually designate the 25 
                insurers in such MSA having the largest premium volume 
                in the designated lines of insurance.
                    (B) The Secretary shall also annually designate any 
                entity providing insurance in a designated line of 
                insurance as part of a residual market established by 
                State law.
                    (C) The Secretary may designate additional insurers 
                on the basis of such criteria as the Secretary may by 
                rule develop. Such a rule shall be issued in accordance 
                with section 553 of title 5, United States Code. In 
                considering whether to designate additional insurers, 
                the Secretary shall ensure that--
                            (i) insurers who specialize in selling 
                        insurance in urban areas, including surplus 
                        lines insurers, are specifically considered for 
                        designation notwithstanding their premium 
                        volume, and
                            (ii) that insurers representing at least 90 
                        percent of the premium volume in the designated 
                        lines of insurance are designated in such MSA.
            (3) Designation of lines of insurance.--For each MSA 
        designated under paragraph (1) the Secretary shall designate 
        the lines of property and casualty insurance sold in such MSA 
        for which reporting is required under section 3. At a minimum, 
        the Secretary shall annually designate--
                    (A) private passenger automobile insurance 
                (including appropriate sublines and classes),
                    (B) property insurance which does not cover 
                commercial property (including appropriate sublines and 
                classes and related coverages such as coverage of 
                property contents and property insured at cash value), 
                and
                    (C) commercial insurance for small business.
        The Secretary may designate additional lines of insurance on 
        the basis of such criteria as the Secretary may by rule 
        develop. Such a rule shall be issued in accordance with section 
        553 of title 5, United States Code. For purposes of this Act, 
        the designation of a line of insurance includes a designation 
        of a subline or class of insurance.
            (4) Timing of designations.--The Secretary shall make the 
        annual designations required by paragraphs (1), (2), and (3) no 
        later than September 1 of the year preceding the year for which 
        reporting is required under section 3. The Secretary shall 
        notify persons involved in the designations no later than the 
        October 1 which follows the designation.
    (b) Obtaining Information.--The Secretary may obtain from insurers 
such information as the Secretary may require to make designations 
under subsection (a).

SEC. 5. DISCLOSURES TO REJECTED APPLICANTS.

    (a) In General.--Except as provided in subsection (e), the 
Secretary shall, by regulation issued under section 553 of title 5, 
United States Code--
            (1) require insurers to provide to each applicant for 
        insurance in a designated line--
                    (A) reasons for denying an application for such 
                insurance or for canceling or not renewing a policy in 
                force, and
                    (B) actions the applicant may take to qualify for 
                such insurance, and
            (2) restrict the use insurers may make of information 
        relating to--
                    (A) adverse underwriting decisions, or
                    (B) insurance coverage in a residual market.
    (b) Model Acts.--In issuing regulations under subsection (a), the 
Secretary shall consider relevant portions of model acts developed by 
the National Association of Insurance Commissioners.
    (c) Enforcement.--The Secretary may delegate to the States the 
authority to enforce the requirements of regulations issued under 
subsection (a).
    (d) Preemption.--Subsection (a) is not to be construed to preempt 
any State from imposing on insurers requirements of the type stated in 
such subsection, including requirements which are more stringent or 
more comprehensive.
    (e) Exemption.--A regulation issued under subsection (a) may not 
apply to insurance provided under a program underwritten or 
administered by the United States.
    (f) Definition.--For purposes of subsection (a)(2)(A), an adverse 
underwriting decision means any of the following actions with respect 
to insurance transactions involving insurance coverage which is 
individually underwritten:
            (1) A declination of insurance coverage.
            (2) A termination of insurance coverage.
            (3) Failure of an agent to apply for insurance coverage 
        with a specific insurance entity which the agent represents and 
        which is requested by the applicant.
            (4) In the case of property or casualty insurance 
        coverage--
                    (A) place by an insurance entity or agent of a risk 
                with a residual market mechanism, an unauthorized 
                insurer, or an insurance entity which specializes in 
                substandard risks, or
                    (B) the charging of higher rates on the basis of 
                information which differs from that which the applicant 
                or policyholder furnished.

SEC. 6. TERMINATION OF AGENTS.

    (a) Regulations.--Except as provided in subsection (d), the 
Secretary shall, by regulation issued under section 553 of title 5, 
United States Code, ensure that the practices of insurers in 
terminating agents who handle property or casualty insurance do not 
result in an inappropriate effect on the availability or affordability 
of insurance from such insurers. Such regulations shall specifically 
ensure that such practices do not result in unfair discrimination 
against agents as a result of their geographic locations or of the 
geographic locations of their clients. Regulations under subsection (a) 
shall be stated in terms of minimum standards.
    (b) Preemption.--Subsection (a) is not to be construed to preempt 
any State from imposing on insurers requirements of the type stated in 
such subsection, including requirements which are more stringent or 
more comprehensive.
    (c) Enforcement.--The Secretary may delegate to the States the 
enforcement of such regulations.
    (d) Exemption.--A regulation issued under subsection (a) may not 
apply to insurance provided under a program underwritten or 
administered by the United States.

SEC. 7. IMPLEMENTATION.

    The Secretary shall prescribe such regulations as may be necessary 
to carry out section 3. Such regulations may contain such 
classifications, differentiations, or other provisions, and may provide 
for such adjustments and exceptions for any class of transactions, as 
in the judgment of the Secretary are necessary and proper to effectuate 
the purposes of such section and to prevent circumvention or evasion 
thereof or to facilitate compliance therewith.

SEC. 8. RELATION TO STATE LAWS.

    This Act does not annul, alter, or affect, or exempt the obligation 
of any insurer subject to this Act to comply with the laws of any State 
or subdivision thereof with respect to public disclosure and 
recordkeeping.

SEC. 9. IMPROVED METHODS.

    The Secretary shall develop, or assist in the improvement of, 
methods of matching addresses and census tracts to facilitate 
compliance by insurers, in as economical a manner as possible, with the 
requirements of this Act.

SEC. 10. REPORT.

    The Secretary shall report to the Committee on Commerce of the 
House of Representatives and the Committee on            of the Senate 
on the implementation of this Act and shall make recommendations to 
such committees on such additional legislation as the Secretary deems 
appropriate to carry out this Act.

SEC. 11. COMPILATION OF AGGREGATE DATA.

    (a) Scope of Data and Tables.--The Secretary shall compile each 
year, for each MSA, aggegate data by census tract for all insurers who 
are subject to section 3 or who are exempt from section 3 under 
subsection (b)(5)(A) of such section. The Secretary shall also produce 
tables indicating, for each MSA, aggregate insurance underwriting 
patterns for various categories of census tracts grouped according to 
location, age of property, income level, and racial characteristics.
    (b) Availability to Public.--The data compiled and the tables 
produced pursuant to subsection (a) shall be made available to the 
public on a timetable determined by the Secretary but not later than 
December 31 of the year following the calendar year on which the data 
and tables are based.

SEC. 12. ENFORCEMENT.

    (a) Civil Penalties.--An insurer who does not comply with the 
requirements of section 3 or a regulation issued under section 5 or 6 
shall be subject to a civil penalty of not to exceed $5,000 for each 
day during which such violation continues.
    (b) Injunction.--The district courts of the United States shall 
have jurisdiction over a petition of the Secretary to enjoin an insurer 
from actions which are in violation of the requirements of section 3 or 
of a regulation issued under section 5 or 6.

SEC. 13. DEFINITIONS.

    For purposes of this Act:
            (1) The term ``commercial insurance'' means any line of 
        property and casualty insurance, except private passenger 
        automobile and homeowner's insurance.
            (2) The term ``insurer'' means any corporation, 
        association, society, order, firm, company, partnership, 
        individual, or aggregation of individuals which is subject to 
        examination or supervision by any State insurance regulator, or 
        which is doing or represents an insurance business.
            (3) The term ``personal lines of insurance'' means any 
        property and casualty insurance issued for noncommercial 
        personal, family, or household purposes.
            (4) The term ``property and casualty insurance'' means 
        insurance against loss of or damage to property, insurance 
        against loss of income or extra expense incurred because of 
        loss of, or damage to, property, and insurance against third 
        party liability claims caused by negligence or imposed by 
        statute or contract.
            (5) The term ``residual market'' means an assigned risk 
        plan, joint underwriting association, or any similar mechanism 
        designed to make insurance available to those unable to obtain 
        it in the voluntary market.
            (6) The term ``Secretary'' means the Secretary of Commerce.
            (7) The term ``State'' means any State, the District of 
        Columbia, the Commonwealth of Puerto Rico, the Northern Mariana 
        Islands, the Virgin Islands, American Samoa, and the Trust 
        Territory of the Pacific Islands.

SEC. 14. EFFECTIVE DATE

    The requirements of this Act shall take effect with respect to 
calendar year 1996.

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