Relating to prohibiting the use of credit scoring in certain lines of personal insurance.
Impact
The implementation of HB 2741 would significantly alter existing state laws that allow insurance companies to factor credit scores into their assessments of risk for personal insurance policies. By removing the ability for insurers to use this data, the bill seeks to level the playing field for consumers who may otherwise be penalized for poor credit history, ensuring that insurance rates are more closely aligned with actual risk rather than financial status. This could lead to a decrease in premium costs for a subset of consumers who are currently paying higher rates due to their credit scores.
Summary
House Bill 2741 aims to prohibit the use of credit scoring in specific lines of personal insurance. The bill is intended to protect consumers by preventing insurance companies from using credit scores as a determinant for premium rates or eligibility. This legislative measure reflects a growing concern over the fairness and transparency of credit scoring practices, especially in contexts where it may disproportionately affect individuals with lower credit scores, potentially leading to higher insurance costs.
Contention
Debates around HB 2741 are likely to center on issues of risk assessment and the financial impacts on the insurance industry. Proponents argue that prohibiting credit scoring practices in insurance will enhance consumer fairness and prevent discrimination against those with less favorable credit histories. Conversely, critics may emphasize that removing credit scoring could undermine the insurance industry's ability to assess risk adequately, potentially leading to increased costs for all consumers as insurers adjust to the new regulations. This debate highlights the balance between consumer protection and the business practices of insurance providers.
Texas Constitutional Statutes Affected
Insurance Code
Chapter 559. Credit Scoring And Credit Information
Relating to prohibiting the use of certain credit scores, including environmental, social, or governance scores and social credit scores, by certain financial institutions and other lenders in this state; providing a civil penalty.
Relating to consideration by insurers of certain prohibited criteria for ratemaking and coverage decisions and the use of disparate impact analysis regarding certain insurance practices.
Relating to the prohibition of certain discrimination based on sexual orientation or gender identity or expression; providing an administrative penalty.
Relating to prohibitions on the illegal entry into or illegal presence in this state by a person who is an alien, the enforcement of those prohibitions and certain related orders, including immunity from liability and indemnification for enforcement actions, and authorizing or requiring under certain circumstances the removal of persons who violate those prohibitions; creating criminal offenses.
Prohibits automobile insurers from using underwriting rules to raise automobile insurance rates on persons deemed not at fault in motor vehicle accidents.