[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2753 Introduced in House (IH)]
103d CONGRESS
1st Session
H. R. 2753
To provide for public access to information regarding the availability
of insurance, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 27, 1993
Mr. Foglietta introduced the following bill; which was referred jointly
to the Committees on Banking, Finance and Urban Affairs and Energy and
Commerce
_______________________________________________________________________
A BILL
To provide for public access to information regarding the availability
of insurance, and for other purposes.
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 ``Insurance Anti-Redlining Act of
1993''.
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 between areas of
different incomes and racial composition;
(2) such disparities adversely affect the affordability and
availability of insurance for consumers;
(3) the lack of affordable and adequate insurance for
qualified consumers severely limits the ability of such
consumers to obtain credit for home, business, and automobile
purchases; and
(4) 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) Designated Insurers.--Except as provided in section 4(e), each
insurer designated under section 7(a)(2), which sells a line of
insurance designated under section 7(a)(3) in a Metropolitan
Statistical Area or Consolidated Metropolitan Statistical Area (both
hereafter in this Act referred to as an ``MSA'') designated by the
Director of the Office of Management and Budget, shall compile and make
available for each calendar year to the Secretary of Commerce (in
accordance with section 6 and regulations of the Secretary) and to the
public for inspection and copying at the home office or at a central
depository established under section 5 and at least one branch office
(if there is one) within such MSA--
(1) the number and total coverage amount of insurance
policies by designated line which were issued in such MSA;
(2) the number and total coverage amount of insurance
policies by designated line for which the insurer received a
completed application in such MSA;
(3) the number and total coverage amount of insurance
policies by designated line for which the insurer received a
completed application and which were not issued, in such MSA;
(4) the number and total coverage amount of insurance
policies by designated line which were renewed in such MSA;
(5) the number and total coverage amount of insurance
policies by designated line for which the insurer received a
completed application for renewal in such MSA;
(6) the number and total coverage amount of insurance
policies by designated line for which the insurer received a
completed application for renewal and which were not renewed,
in such MSA;
(7) the number and total coverage amount of insurance
policies by designated line which were canceled by the insurer,
in such MSA;
(8) the number of agents of such insurer whose principal
place of business is located in such MSA and the number within
each census tract or county, as applicable, in such 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 nonexclusive basis;
(9) the number of agents of such insurer whose principal
place of business was located in such MSA but which was
relocated outside such MSA or whose agency was terminated, and
the number of such agents for each census tract or county, as
applicable, in such MSA; and
(10) the number of agents of such insurer whose principal
place of business was established at a location in such MSA and
the number of such agents for each census tract or county, as
applicable, in such MSA.
(b) Nondesignated Insurers.--Except as provided in section 4(e),
each insurer which sells an insurance policy in a designated line of
insurance in an MSA and which is not a designated insurer in such MSA
shall report for each calendar year to the Secretary (in accordance
with section 6 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--
(1) itemized by census tract for policies sold within any
county with a population of more than 30,000 within the MSA; or
(2) 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 September 1 of the
calendar year following the calendar year for which the information is
required to be reported.
SEC. 4. REQUIREMENTS.
(a) Content.--The information required to be maintained and made
available under section 3(a) shall--
(1) 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--
(A) census tracts for insurance policies within any
county with a population of more than 30,000 within the
MSA; or
(B) county for insurance policies within any other
county within such MSA;
(2) disclose for each designated line of insurance in an
MSA and, with respect to each such line, for each census tract
or county, as applicable, in the MSA--
(A) the total number of claims made which with
respect to property insurance shall be disaggregated by
the type and use of the property insured, which types
and uses shall include--
(i) properties consisting of 1 to 4
dwelling units;
(ii) properties consisting of more than 4
dwelling units;
(iii) owner-occupied properties;
(iv) rental properties; and
(v) vacant properties; and
(B) the total amount paid in claims which with
respect to property insurance shall be disaggregated by
the type and use of the property insured, which types
and uses shall include the types and uses described in
clauses (i) through (v) of subparagraph (A);
(3) disclose the standards and criteria used in
underwriting each designated line of insurance; and
(4) be made available to the public on a timetable
determined by the Secretary but not later than September 1 of
the calendar year following the calendar year for which the
information is required to be made available.
(b) Itemization of Data.--With respect to insurance and
applications for which information is required to be maintained and
made available under section 3(a), the following information shall be
maintained and made available for each policy and each completed
application:
(1) The MSA for which such insurance is issued or applied
and within such MSA the census tract or county, as applicable,
for which such insurance is issued or requested.
(2) The designated insurer who issued such insurance or to
whom the application was made.
(3) The date of the issuance of such insurance.
(4) The line of the insurance which is designated and any
subline or class of such insurance.
(5) The type of insurance or policy form for which
applications are made and the types of insurance and policy
forms which are issued.
(6) The amount of coverage provided under such insurance
and any applicable deductibles.
(7) The amount of the premiums for such insurance.
(8) The durations of such insurance.
(9) The racial characteristics and gender of the applicants
for such insurance.
(10) A notation if such insurance was issued in a voluntary
or residual market.
(11) The date of, and reason for, any declination,
cancellation, or nonrenewal made for such insurance.
(12) With respect to property insurance, the market value
of the property insured and the type and use of property
insured.
(c) Period of Maintenance.--Any information required to be compiled
and made available under section 3 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.
(d) Format for Disclosures.--Subject to section 5, the Secretary
shall prescribe a standard format for making information available as
required by section 3. Such format shall encourage the submission of
information in a form readable by a computer.
(e) Exemptions.--
(1) Secretarial action.--The Secretary may by regulation
exempt from the requirements of section 3 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 section 3 and that such law contains adequate
provisions for enforcement.
(2) United states program.--Reporting shall not be required
under section 3 with respect to insurance provided by a program
underwritten or administered by the United States, including
the national flood insurance program under the National Flood
Insurance Act of 1968, the program for insurance against
burglary and theft under title XII of the National Housing Act,
and mortgage insurance under the National Housing Act.
(f) Completed Application.--For purposes of section 3 and this
section, the Secretary shall define ``completed applications'' to--
(1) ensure that the disclosure required by such sections
appropriately reflects the characteristics of the applicants
interested in purchasing insurance in an MSA; and
(2) prevent insurers from evading the intent of such
sections through practices designed to discourage applicants
from completing applications.
SEC. 5. ACCESS SYSTEM.
(a) In General.--The Secretary shall implement a system to
facilitate access to information required to be maintained and made
available under section 3. Such system shall also include arrangements
for a publicly accessible central depository of information in each
MSA, as provided under subsection (b), and for a telephone number which
can be used by the public, at cost, to request such information.
Written statements containing such information shall be made available
to the public for inspection and copying at such central depository of
information for all designated insurers within such MSA. The Secretary
shall make copies of such statements available in forms readable by
widely used personal computers. The Secretary may charge a fee for such
information, which may not exceed the amount, determined by the
Secretary, that is equal to the cost of producing the computer
statements.
(b) Use of Home Mortgage Disclosure Act Depositories.--To the
extent practicable, the central depositories referred to in subsection
(a) shall be the central depositories established under section 304(f)
of the Home Mortgage Disclosure Act of 1975. The Federal Financial
Institutions Examination Council shall consult with the Secretary
regarding the use of such depositories and shall provide for the use of
such depositories to the extent agreed to by such Council and the
Secretary.
SEC. 6. SUBMISSION TO SECRETARY.
The information referred to in section 3 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. 7. 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. 8. DISCLOSURES TO REJECTED APPLICANTS.
(a) In General.--Except as provided in subsection (e), the
Secretary shall, by regulations 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, including the national flood
insurance program under the National Flood Insurance Act of 1968, the
program for insurance against burglary and theft under title XII of the
National Housing Act, and mortgage insurance under the National Housing
Act.
(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) placement 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. 9. 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 private mortgage insurance or 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 this subsection shall be stated in terms of minimum standards.
(b) Preemption.--Subsection (a) may not 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, including the national flood
insurance program under the National Flood Insurance Act of 1968, the
program for insurance against burglary and theft under title XII of the
National Housing Act, and mortgage insurance under the National Housing
Act.
SEC. 10. IMPLEMENTATION.
(a) In General.--The Secretary shall prescribe such regulations as
may be necessary to carry out sections 3 through 6. 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.
(b) Burdens.--In prescribing regulations under subsection (a), the
Secretary shall take into consideration the administrative, paperwork,
and other burdens on insurance agents, including independent insurance
agents, involved in complying with the requirements of sections 3
through 6 and shall minimize the burdens imposed by such requirements
with respect to such agents.
SEC. 11. 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. 12. COMPILATION OF AGGREGATE DATA.
(a) Scope of Data and Tables.--The Secretary shall compile each
year, for each MSA, aggregate data by census tract for all insurers who
are subject to section 3 or who are exempt from section 3 under the
provisions of section 4(e)(1) 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 1 of the year following the calendar year on which the data
and tables are based. The data shall be made available using the system
implemented under section 5, in the forms required under such section,
and subject to the provisions of such section.
SEC. 13. TESTERS.
The Secretary may utilize employees and officers of the Department
of Commerce and may provide advice and technical assistance to State
and local government agencies and public and private entities
(including nonprofit organizations), to develop, implement, carry out,
or coordinate programs or activities designed to--
(1) prevent or eliminate discriminatory insurance
practices; or
(2) obtain enforcement of Federal and State laws
prohibiting discriminatory insurance practices.
SEC. 14. ENFORCEMENT.
(a) Civil Penalties.--An insurer who does not comply with the
requirements of sections 3 through 6, or a regulation issued under
section 8 or 9, 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 sections 3
through 6 or of a regulation issued under section 8 or 9.
SEC. 15. RELATION TO STATE LAWS.
This Act does not annul, alter, 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. 16. 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 ``designated insurer'' means an insured
designated by the Secretary under section 7(a)(2).
(3) The term ``designated line'' means a line of insurance
designated by the Secretary under section 7(a)(3).
(4) 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.
(5) The term ``private mortgage insurance'' means insurance
against the nonpayment of, or default on, a mortgage or loan
for residential or commercial property, except that such term
does not include mortgage insurance made available under the
National Housing Act.
(6) 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.
(7) 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.
(8) The term ``Secretary'' means the Secretary of Commerce.
(9) 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. 17. EFFECTIVE DATE.
The requirements of this Act shall take effect with respect to
calendar year 1994.
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