PAID Act, Sec. 3 (Requirements for Private Passenger Automobile Insurers)

Proposed 2023-06-06 | Official source

Summary

Prohibits insurers from using specific personal factors, including gender and credit score, to determine car insurance rates. Requires submission to FTC to ensure no disparate impacts from algorithms. Mandates public access to underwriting rules.

This summary is awaiting validation (peer review by a second AGORA editor).

Key facts

🏛️ This document was proposed and/or enacted by the United States Congress but is now defunct. For authoritative text and metadata, visit the official source.

🎯 This document primarily applies to the government, rather than the private sector.

📜 This document's name is PAID Act, Sec. 3 (Requirements for Private Passenger Automobile Insurers). It is part of PAID Act.

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Risk factors (1)

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Harms (1)

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Full text

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Thematic tags for this document are awaiting validation (peer review by a second AGORA editor).

1. REQUIREMENTS FOR PRIVATE PASSENGER AUTOMOBILE INSURERS. (a) Use Of Certain Factors And Income Proxies Prohibited.—It shall be unlawful for a private passenger automobile insurer, or any of its affiliate insurers, to take into consideration any of the factors described in subsection (b) relating to a consumer in determining that consumer’s eligibility for automobile insurance or in calculating the rate for that consumer.

(b) Factors.—The factors referred to in subsection (a) are— (1) gender; (2) level of education; (3) occupation; (4) employment status; (5) home ownership status; (6) ZIP Code or adjacent ZIP Codes; (7) census tract; (8) marital status; (9) credit score or credit-based insurance score; (10) consumer report; (11) previous insurer; or (12) prior purchase of insurance of a consumer from that automobile insurer.

(c) Submissions To FTC Regarding Certain Business Practices.—Not later than 1 year after the date of the enactment of this Act, and every 2 years thereafter, each private passenger automobile insurer, and each of its affiliate insurers, shall submit to the Federal Trade Commission such information as the Commission may require to demonstrate that the marketing, underwriting, rating, claims handling, and fraud investigations of such private passenger automobile insurer or affiliate insurer (as the case may be), and any algorithm or model used by such private passenger automobile insurer or affiliate insurer (as the case may be) for such marketing, underwriting, rating, claims handling, or fraud investigations, do not disparately impact any group of customers based on race, color, national or ethnic origin, religion, sex, sexual orientation, disability, gender identity, or gender expression.

AI-focused summary

Requires each private passenger auto insurer and its affiliates must submit information to the FTC showing that their business practices and any algorithms or models they use do not result in discriminatory impacts on protected groups. This reporting is required within one year of enactment and every two years after that.

(d) Public Availability Of Information.—All underwriting rules and rate filings for use by any private passenger automobile insurer shall be available for public inspection and may not be considered proprietary trade secret information.

(e) Reasonable Procedures To Assure Compliance.—No person shall be held liable for any violation of this Act if the person shows by a preponderance of the evidence that at the time of the alleged violation the person maintained reasonable procedures to assure compliance with the provisions of this Act.

(f) Rules Of Construction.— (1) FACTORS AND METHODS INFLUENCING PREMIUMS.—For the purposes of this Act, a violation of subsection (a) shall be considered to have occurred whenever the consideration of any of the factors described in subsection (b) prevents the consumer from obtaining insurance at the lowest rate available to the consumer from a private passenger automobile insurer or any of its affiliates. Actions considered a violation of such subsection include the usage or consideration of any such factor resulting in— (A) the determination of a consumer’s eligibility for automobile insurance or the calculation of the rate for that consumer; (B) an action which prevents a consumer from receiving certain rebates or discounts; (C) an action which prevents a consumer from obtaining insurance from an automobile insurer or any of its affiliate companies; (D) a denial, cancellation, non-renewal, or change in policy or coverage terms; or (E) any other impact on a consumer’s premium for insurance.

(2) AUTHORITY OF FEDERAL AND STATE AGENCIES.—Nothing in this Act is intended to affect the authority of any Federal or State agency to enforce a prohibition against unfair or deceptive acts or practices, including the making of false or misleading statements in connection with a credit or insurance transaction that is not initiated by the consumer.