Texas House Bill HB1157

Texas 2009 - 81st Regular

Caption

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

Impact

If enacted, HB1157 would reshape the climate of personal insurance underwriting within Texas, significantly impacting how insurers assess risk. The prohibition against using credit metrics in policy decisions could lead to changes in how premiums are calculated, potentially lowering costs for consumers who may have had adverse credit information influencing their insurance rates unfairly. Additionally, this law would likely expand access to insurance for individuals with poor credit histories, thus encouraging greater inclusivity within the insurance market.

Summary

House Bill 1157 seeks to prohibit the use of credit scoring in underwriting and rating certain lines of personal insurance. The bill amends the Insurance Code by clearly defining how insurers can and cannot utilize credit information, specifically forbidding them from making underwriting decisions based solely on an applicant's credit score or related credit information. This move intends to protect consumers from potential discrimination and ensure that personal insurance premiums and eligibility are more equitable and reflective of actual risk, rather than creditworthiness.

Contention

Although the bill aims to protect consumers, it may face opposition from the insurance industry, which often argues that credit scores are a reliable predictor of risk and claim likelihood. Some industry representatives may voice concerns about the financial implications of not utilizing credit scoring, suggesting that this could lead to increased premiums across the board as insurers compensate for potential losses. Additionally, there may be a debate about the balance between consumer protection and the operational realities insurance companies face when underwriting policies.