| 1 | 1 | | 81R14005 PMO-D |
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| 2 | 2 | | By: Harper-Brown H.B. No. 2734 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to disclosure of credit scoring by insurers. |
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| 8 | 8 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 9 | 9 | | SECTION 1. Section 559.051, Insurance Code, is amended to |
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| 10 | 10 | | read as follows: |
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| 11 | 11 | | Sec. 559.051. PERMISSIBLE USE OF CREDIT SCORING; |
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| 12 | 12 | | ADVERTISEMENT. (a) An insurer may use credit scoring, except for |
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| 13 | 13 | | factors that constitute unfair discrimination, to develop rates, |
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| 14 | 14 | | rating classifications, or underwriting criteria regarding lines |
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| 15 | 15 | | of insurance subject to this chapter. |
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| 16 | 16 | | (b) A person may not use an advertisement for or display on |
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| 17 | 17 | | an Internet website an insurance product from a line of insurance |
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| 18 | 18 | | that uses credit scoring under Subsection (a) unless the |
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| 19 | 19 | | advertisement or website includes in a prominent place the |
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| 20 | 20 | | following language or similar language: "In connection with this |
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| 21 | 21 | | insurance product, we may review your credit report or obtain or use |
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| 22 | 22 | | a credit score based on the information contained in that credit |
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| 23 | 23 | | report. We may use a third party in connection with the development |
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| 24 | 24 | | of your credit score." |
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| 25 | 25 | | SECTION 2. Sections 559.053(a), (b), and (c), Insurance |
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| 26 | 26 | | Code, are amended to read as follows: |
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| 27 | 27 | | (a) An insurer that uses credit scoring in the underwriting |
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| 28 | 28 | | or rating of insurance subject to this chapter shall disclose to |
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| 29 | 29 | | each applicant for insurance coverage that the applicant's credit |
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| 30 | 30 | | report may be used in the underwriting or rating of the applicant's |
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| 31 | 31 | | policy. The disclosure must be provided at the time of application |
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| 32 | 32 | | by the insurer or agent and may be given [orally,] in writing[,] or |
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| 33 | 33 | | electronically. |
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| 34 | 34 | | (b) If a policy is issued to the applicant for insurance |
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| 35 | 35 | | coverage, an insurer or agent shall [is not required to] make the |
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| 36 | 36 | | disclosure required under Subsection (a) on any subsequent renewal |
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| 37 | 37 | | of the coverage. |
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| 38 | 38 | | (c) An insurer or its agent shall disclose to its customers, |
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| 39 | 39 | | in writing or electronically, on a form adopted by the |
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| 40 | 40 | | commissioner, whether credit information will be obtained on an |
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| 41 | 41 | | applicant for insurance coverage or insured or on any other member |
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| 42 | 42 | | or members of the applicant's or insured's household and used as |
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| 43 | 43 | | part of the insurance credit scoring process. |
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| 44 | 44 | | SECTION 3. This Act applies only to an insurance policy or |
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| 45 | 45 | | contract or evidence of coverage that is delivered, issued for |
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| 46 | 46 | | delivery, or renewed on or after January 1, 2010. An insurance |
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| 47 | 47 | | policy or contract or evidence of coverage delivered, issued for |
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| 48 | 48 | | delivery, or renewed before January 1, 2010, is governed by the law |
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| 49 | 49 | | as it existed immediately before the effective date of this Act, and |
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| 50 | 50 | | that law is continued in effect for that purpose. |
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| 51 | 51 | | SECTION 4. This Act takes effect September 1, 2009. |
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