Texas House Bill HB2741

Texas 2025 - 89th Regular

• Filed: 2/12/25

Caption

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
  • Section: New Section