Texas House Bill HB1490

Texas 2017 - 85th Regular

Caption

Relating to prohibiting the use of credit scoring in certain lines of personal insurance.

Impact

The implications of HB1490 signify a significant shift in the way personal insurance is assessed in Texas. By eliminating credit scoring as a factor, it ensures that the underwriting process for insurance policies must rely on other metrics unrelated to credit history. The legislation aims to foster a more equitable insurance environment that protects consumers, particularly those who might be marginalized due to their credit scores. This change may promote greater accessibility to insurance for lower-income individuals or those recovering from financial hardship, thereby supporting broader consumer rights in financial services.

Summary

House Bill 1490 aims to prohibit the use of credit scoring in certain lines of personal insurance, directly amending the Texas Insurance Code. This legislative measure intends to ensure that consumers are not unfairly discriminated against based on their credit history when applying for personal insurance coverage. By preventing insurers from using credit information as a factor in underwriting or determining premiums, the bill seeks to promote fairer treatment for individuals who may have poor credit scores yet are otherwise responsible and low-risk individuals for insurance purposes.

Contention

The bill could face opposition from insurers who argue that the removal of credit scoring undermines their ability to accurately assess risk. Insurers may contend that credit scoring serves as a reliable predictor of risk, and removing it may lead to higher overall premiums for consumers classified as higher risk in other manners. Additionally, proponents of the bill assert that reliance on credit scoring can perpetuate existing inequalities, making it critical that the insurance industry reevaluates its underwriting criteria to better serve all Texans. This legislation also raises questions about how insurers will adapt and if they will develop new metrics to assess risk without credit information.