119-hr3664

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3664 Introduced in House

    (IH) ]

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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.
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