An Act to provide consumer protection through fair access to financial and insurance products and services.
Be it enacted by the Legislature of the State of South Dakota:
Section 1. That a NEW SECTION be added to chapter 51A-1:
Terms used in this Act mean:
(1) "Financial institution," any state or national bank, credit union, savings and loan association, trust company, or other entity that is engaged in the business of accepting deposits, making loans, or providing other financial services and that is chartered, licensed, or regulated under chapter 51A or federal law; and
(2) "Unsafe or unsound practice," means:
(a) Any practice or conduct found to be contrary to generally accepted standards applicable to a financial institution or a violation of any prior agreement in writing or order of a state or federal regulatory agency, which practice, conduct, or violation creates the likelihood of loss, insolvency, or dissipation of assets or otherwise prejudices the interest of the financial institution or its depositors or members;
(b) A failure to comply with sections 2 to 7, inclusive, of this Act; or
(c) A practice described in sections 2 to 7, inclusive, of this Act.
Section 2. That a NEW SECTION be added to chapter 51A-1:
A financial institution must make a determination about the provision or denial of services based on an analysis of risk factors unique to each current or prospective customer or member and may not engage in an unsafe or unsound practice as provided in sections 1 to 7, inclusive, of this Act.
This section does not restrict a financial institution that claims a religious purpose from making these determinations based on the current or prospective customer's or member's religious beliefs, religious exercise, or religious affiliations.
Section 3. That a NEW SECTION be added to chapter 51A-1:
It is an unsafe or unsound practice for a financial institution to deny or cancel its services to a person, or to otherwise discriminate against a person in making available such services or in the terms or conditions of such services, on the basis of:
(1) The person's political opinions, speech, or affiliations;
(2) The person's religious beliefs, religious exercise, or religious affiliations, except as provided in section 2 of this Act;
(3) Any factor if it is not a quantitative, impartial, and risk-based standard, including any factor related to the person's business sector; or
(4) The use of any rating, scoring, analysis, tabulation, or action that considers a social credit score based on factors including, but not limited to:
(a) The person's political opinions, speech, or affiliations;
(b) The person's religious beliefs, religious exercise, or religious affiliations;
(c) The person's lawful ownership of a firearm;
(d) The person's engagement in the lawful manufacture, distribution, sale, purchase, or use of firearms or ammunition;
(e) The person's engagement in the exploration, production, utilization, transportation, sale, or manufacture of fossil fuel-based energy, timber, mining, or agriculture;
(f) The person's support of the state or federal government in combatting illegal immigration, drug trafficking, or human trafficking; or
(g) The person's engagement with, facilitation of, employment by, support of, business relationship with, representation of, or advocacy for any person described in this section.
Section 4. That a NEW SECTION be added to title 51:
It is an unsafe and unsound practice for a financial institution to deny or cancel its services to a person, or to otherwise discriminate against a person in making available services or in the terms or conditions of services on the basis of the person's failure to meet or commit to meet, or expected failure to meet, any of the following as long as the person is in compliance with applicable state or federal law:
(1) Environmental standards, including emissions standards, benchmarks, requirements, or disclosures;
(2) Social governance standards, benchmarks, or requirement, including, but not limited to, environmental or social justice;
(3) Corporate board or company employment composition standards, benchmarks, requirements, or disclosures based on characteristics protected under state law; or
(4) Policies or procedures requiring or encouraging employee participation in social justice programming, including, but not limited to, diversity, equity, or inclusion training.
Section 5. That a NEW SECTION be added to chapter 51A-1:
Beginning September 30, 2024, and by December thirty-first of each year thereafter, a financial institution subject to title 51A must attest, under penalty of perjury, on a form prescribed by the Division of Banking, whether the entity is acting in compliance with sections 1 to 7, inclusive, of this Act.
Section 6. That a NEW SECTION be added to chapter 51A-1:
In making a determination that a financial institution participated in an unsafe or unsound practice, the Division of Banking must consider the size and condition of the financial institution, the gravity of the violation, and the prior conduct of the person or institution involved.
Section 7. That a NEW SECTION be added to chapter 51A-1:
Engaging in a practice described in section 4 of this Act or failing to timely provide the attestation under section 5 of this Act is a failure to comply with this chapter and is subject to the applicable sanctions and penalties provided for in title 51A.
Section 8. That 58-33-67 be AMENDED:
58-33-67. In dealing with the insured or representative of the insured, unfair or deceptive acts or practices in the business of insurance include, but are not limited to, the following:
(1) Failing to acknowledge and act within thirty days upon communications with respect to claims arising under insurance policies and to adopt and adhere to reasonable standards for the prompt investigation of such claims;
(2) Making claims payments to any claimant, insured, or beneficiary not accompanied by a statement setting forth the coverage under which the payments are being made;
(3) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement;
(4) Failing to promptly settle claims, where liability has become reasonably clear under one portion of the insurance policy coverage to influence settlements under other portions of the insurance policy coverage;
(5) Requiring as a condition of payment of a claim that repairs to any damaged vehicle shall be made by a particular contractor or repair shop;
(6) Failing to make a good faith assignment of the degree of contributory negligence in ascertaining the issue of liability;
(7) Unless permitted by law and the insurance policy, refusing to settle a claim of an insured or claimant on the basis that the responsibility should be assumed by others; and
(8) Refusing to insure or charging a different rate solely in consideration of the risks relating to environmental, social, and governance criteria, including diversity, equity, and inclusion policies, or political and ideological factors, unless the refusal or different rate is the result of the application of sound underwriting and actuarial principles related to actual or reasonably anticipated loss experience.