PAID Act · Introduced in House (2025-05-29)

SEC. 2. Findings

Congress finds the following:

Private passenger automobile insurance companies are institutions which help spread risk of loss over a collective group of policyholders.
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.
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.
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.
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.
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—
- gender;
- level of education;
- occupation;
- employment status;
- home ownership status;
- ZIP Code or adjacent ZIP Codes;
- census tract;
- marital status;
- credit score or credit-based insurance score;
- consumer report;
- previous insurer; or
- prior purchase of insurance of a consumer from that automobile insurer.

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—

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 () 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. 15 U.S.C. 41 et seq.
(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—
  - any actual damages sustained by the consumer as a result of the failure;
  - such amount of punitive damages as the court may allow; and
  - 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—
  - any actual damages sustained by the consumer as a result of the failure; and
  - 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.

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:

The term affiliate,control 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 means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the entity, whether—
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.
The term census tract means any small, relatively permanent statistical subdivision of a county, as used by the United States Census Bureau.
The term consumer report has the meaning given such term in section 603 of the Fair Credit Reporting Act (), 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. 15 U.S.C. 1681a
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.
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)
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.
The term home ownership status refers to whether a consumer currently owns any real property which may be used as a residence.
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.
The term occupation means a consumer’s current lawful employment position in a career or identifiable trade category.
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—

H.R. 3664

Table of contents

SEC. 1. Short title

SEC. 2. Findings

SEC. 3. Requirements for private passenger automobile insurers

SEC. 4. Enforcement

SEC. 5. Relation to State law

SEC. 6. Definitions

SEC. 7. Effective date