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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3664 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 3664
To prohibit private passenger automobile insurers from using certain
income proxies to determine insurance rates and eligibility.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 29, 2025
Mrs. Watson Coleman (for herself, Ms. Tlaib, and Mr. Takano) 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
consideration 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 Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Prohibit Auto Insurance
Discrimination Act'' or the ``PAID Act''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Private passenger automobile insurance companies are
institutions which help spread risk of loss over a collective
group of policyholders.
(2) Private passenger automobile insurance is mandated in
all States but New Hampshire. Legal penalties for operating a
vehicle without liability insurance in these States range from
fines, to license suspensions or revocations, to imprisonment.
(3) The private passenger automobile insurance industry
uses different variables to predict the overall costs and risks
of drivers. The analysis and use of these variables ultimately
help the automobile insurer set premium rates charged to
consumers which the automobile insurer determines to be
actuarially supported.
(4) A pure loss ratio, a measurement of profitability in
insurance, is defined as losses divided by premiums.
Statistical correlations between certain variables and pure
loss ratios should be interpreted to mean that the selected
variable relates to profitability, but not necessarily to the
risk that an individual will get into an automobile accident.
(5) A growing trend in the private passenger automobile
insurance industry is to use income proxies for underwriting
and rating. The use of income proxies such as a driver's
education level, occupation, employment status, home ownership
status, credit score, consumer report, previous insurer, and
prior purchase of insurance by the industry as variables that
significantly influence the insurance premiums charged to
drivers has become commonplace. Use of these income proxies in
this fashion results in higher rates being charged to lower
income drivers while lower rates are being charged to the more
affluent driver.
(6) The American public is largely unaware that a person's
education level, occupation, employment status, home ownership
status, credit score, consumer report, ZIP Code, census tract,
previous insurer, and prior purchase of insurance may be
significant factors used to determine eligibility for preferred
auto insurance rates regardless of the person's driving
history. As a result of the individual's ineligibility for
preferred rates, the driver's policy and rate will be only
offered from an affiliate company that has higher rates.
SEC. 3. 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.
(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.
SEC. 4. ENFORCEMENT.
(a) Enforcement by Federal Trade Commission.--
(1) Unfair or deceptive acts or practices.--A violation of
this Act shall be treated as an unfair or deceptive act or
practice proscribed under section 5 of the Federal Trade
Commission Act (15 U.S.C. 45).
(2) Powers of commission.--The Federal Trade Commission
shall enforce this Act in the same manner, by the same means,
and with the same jurisdiction, powers, and duties as though
all applicable terms and provisions of the Federal Trade
Commission Act (15 U.S.C. 41 et seq.) were incorporated into
and made a part of this Act. Any person who violates this Act
shall be subject to the penalties and entitled to the
privileges and immunities provided in the Federal Trade
Commission Act.
(3) Amount of penalty.--Notwithstanding the penalties set
forth in section 5 of such Act, a person who violates this Act
shall be liable for a civil penalty of not less than $2,500 per
violation.
(4) Regulations.--The Federal Trade Commission shall
prescribe, in accordance with section 553 of title 5, United
States Code, such regulations as are necessary to carry out the
purposes of this Act, including regulations as may be necessary
or appropriate to administer and carry out the purposes and
objectives of this Act, and to prevent evasions thereof or to
facilitate compliance therewith.
(b) Actions by Consumers.--
(1) Willful violations.--Any private passenger automobile
insurer who willfully violates this Act with respect to any
consumer is liable to that consumer in an amount equal to the
sum of--
(A) any actual damages sustained by the consumer as
a result of the failure;
(B) such amount of punitive damages as the court
may allow; and
(C) in the case of any successful action to enforce
any liability under this paragraph, the costs of the
action together with reasonable attorneys' fees as
determined by the court.
(2) Negligent violations.--Any private passenger automobile
insurer who is negligent in failing to comply with any
requirement imposed under this Act with respect to any consumer
is liable to that consumer in an amount equal to the sum of--
(A) any actual damages sustained by the consumer as
a result of the failure; and
(B) in the case of any successful action to enforce
any liability under this paragraph, the costs of the
action together with reasonable attorneys' fees as
determined by the court.
(3) Attorneys' fees.--Upon a finding by the court that an
unsuccessful pleading, motion, or other paper filed in
connection with an action under this subsection was filed in
bad faith or for purposes of harassment, the court shall award
to the prevailing party attorneys' fees reasonable in relation
to the work expended in responding to the pleading, motion, or
other paper.
(4) Jurisdiction of courts; limitation of actions.--An
action to enforce any liability created under this subsection
may be brought in any appropriate United States district court,
without regard to the amount in controversy, or in any other
court of competent jurisdiction, not later than the earlier
of--
(A) 2 years after the date of discovery by the
plaintiff of the violation that is the basis for such
liability; or
(B) 5 years after the date on which the violation
that is the basis for such liability occurs.
(c) Actions by States.--
(1) In general.--In any case in which the attorney general
of a State, or an official or agency of a State, has reason to
believe that an interest of the residents of such State has
been or is threatened or adversely affected by an act or
practice in violation of this Act, the State, as parens
patriae, may bring a civil action on behalf of the residents of
the State in an appropriate State court or an appropriate
district court of the United States to--
(A) enjoin such act or practice;
(B) enforce compliance with this Act;
(C) obtain damages, restitution, or other
compensation on behalf of residents of the State; or
(D) obtain such other legal and equitable relief as
the court may consider to be appropriate.
(2) Notice.--Before filing an action under this subsection,
the attorney general, official, or agency of the State involved
shall provide to the Federal Trade Commission a written notice
of such action and a copy of the complaint for such action. If
the attorney general, official, or agency determines that it is
not feasible to provide the notice described in this paragraph
before the filing of the action, the attorney general,
official, or agency shall provide written notice of the action
and a copy of the complaint to the Federal Trade Commission
immediately upon the filing of the action.
(3) Authority of federal trade commission.--On receiving
notice under paragraph (2) of an action under this subsection,
the Federal Trade Commission shall have the right--
(A) to intervene in the action;
(B) upon so intervening, to be heard on all matters
arising therein; and
(C) to file petitions for appeal.
(4) Rule of construction.--For purposes of bringing a civil
action under this subsection, nothing in this Act shall be
construed to prevent an attorney general, official, or agency
of a State from exercising the powers conferred on the attorney
general, official, or agency by the laws of such State to
conduct investigations, administer oaths and affirmations, or
compel the attendance of witnesses or the production of
documentary and other evidence.
SEC. 5. RELATION TO STATE LAW.
This Act does not annul, alter, affect, or exempt any person
subject to the provisions of this Act from complying with the laws of
any State with respect to the collection, distribution, or use of any
information on consumers, the prevention or mitigation of identity
theft, or the regulation of the business of insurance, except to the
extent that those laws are inconsistent with any provision of this Act,
and then only to the extent of the inconsistency.
SEC. 6. DEFINITIONS.
For the purposes of this Act, the following definitions apply:
(1) Affiliate.--The term ``affiliate'' means an entity
that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common
control with another entity. For purposes of this paragraph,
the term ``control'' means the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of the entity, whether--
(A) through the ownership of voting securities;
(B) by contract other than a commercial contract
for goods or non-management services;
(C) by contract for goods or non-management
services where the volume of activity results in a
reliance relationship; or
(D) by common management.
Control shall be presumed to exist if an entity and its
affiliates directly or indirectly own, control, hold with the
power to vote, or hold proxies representing 10 percent or more
of the voting interests of an entity.
(2) Automobile insurer.--The term ``automobile insurer''
means an insurer authorized to transact or transacting
automobile insurance, motor vehicle insurance, automobile or
motor vehicle liability insurance, or any similar insurance
business in the United States.
(3) Census tract.--The term ``census tract'' means any
small, relatively permanent statistical subdivision of a
county, as used by the United States Census Bureau.
(4) Consumer report.--The term ``consumer report'' has the
meaning given such term in section 603 of the Fair Credit
Reporting Act (15 U.S.C. 1681a), except that such term does not
include any communication to the extent such communication
relates to the driving history or place of residence of a
consumer.
(5) Credit-based insurance score.--The term ``credit-based
insurance score'' means a rating based in whole or in part on a
consumer's credit information used in underwriting and rating
of consumers that takes into account certain elements of an
individual's credit history to predict how likely such
individual is to have an insurance loss.
(6) Credit score.--The term ``credit score'' has the
meaning given such term in section 609(f)(2) of the Fair Credit
Reporting Act (15 U.S.C. 1681g(f)(2)).
(7) Employment status.--The term ``employment status''
means a consumer's status as a current full-time employee,
part-time employee, employed, unemployed, underemployed, or any
other such designation which indicates a consumer's work
status.
(8) Home ownership status.--The term ``home ownership
status'' refers to whether a consumer currently owns any real
property which may be used as a residence.
(9) Level of education.--The term ``level of education''
refers to the highest grade level completed in a secondary
school or trade school, a professional licensure or
certification, or the highest undergraduate or graduate college
degree obtained. Such term does not include the completion of a
traffic safety course or scholastic achievement while enrolled
in a school, college, or university.
(10) Occupation.--The term ``occupation'' means a
consumer's current lawful employment position in a career or
identifiable trade category.
(11) Private passenger automobile.--The term ``private
passenger automobile'' means a 4-wheel motor vehicle, whether
owned or leased to an individual or individuals, and that is of
a private passenger or station wagon type, or that is a motor
vehicle with a pickup body, a delivery sedan, a passenger van,
a sports utility vehicle, or a panel truck or a camper type
vehicle, and that--
(A) is not used as a public or livery conveyance
for passengers;
(B) is not rented to others;
(C) has a gross vehicle weight of less than 15,000
pounds; and
(D) is not primarily used in the course of an
occupation, profession, or business of a person other
than farming or ranching.
Such term includes a motor vehicle owned by a farm family co-
partnership or farm family corporation, which is principally
garaged on a farm or ranch and otherwise meets the definition
contained in this paragraph.
SEC. 7. EFFECTIVE DATE.
This Act shall take effect 1 year after the date of enactment of
this Act.
<all>
Introduced in House
Introduced in House
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 consideration of such provisions as fall within the jurisdiction of the committee concerned.
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 consideration of such provisions as fall within the jurisdiction of the committee concerned.
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