81R9689 KCR-D
By: Coleman H.B. No. 3565
A BILL TO BE ENTITLED
AN ACT
relating to the use of credit scoring and rating territories in
writing certain lines of personal insurance.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 559.001(4), (7), and (8), Insurance
Code, are amended to read as follows:
(4) "Consumer" means an individual whose credit
information has been reported to or is in the possession of a
consumer reporting agency or insurer [is used or whose credit score
is computed in the underwriting or rating of a personal insurance
policy]. The term includes an applicant for insurance coverage.
(7) "Credit report" means any written, oral, or other
communication of information by a consumer reporting agency that[:
[(A)] bears on a consumer's creditworthiness,
credit standing, or credit capacity[; and
[(B) is used or expected to be used or collected
in whole or in part to serve as a factor to determine personal
insurance premiums, eligibility for coverage, or tier placement].
(8) "Credit score" or "insurance score" means a number
or rating derived from an algorithm, computer application, model,
or other process that is[:
[(A)] based on credit information[; and
[(B) used to predict the future insurance loss
exposure of a consumer].
SECTION 2. Section 559.002, Insurance Code, is amended to
read as follows:
Sec. 559.002. APPLICABILITY OF CHAPTER. This chapter
applies to each [an] insurer that writes personal insurance
coverage [and uses credit information or credit reports for the
underwriting or rating of that coverage].
SECTION 3. Section 559.003, Insurance Code, is amended to
read as follows:
Sec. 559.003. INFORMATION PROVIDED TO PUBLIC. The
department shall[:
[(1) update insurer profiles maintained on the
department's Internet website to provide information to consumers
stating whether or not an insurer uses credit scoring; and
[(2)] post the report required under former Section
15, Article 21.49-2U, on the department's Internet website.
SECTION 4. Section 559.052, Insurance Code, is amended to
read as follows:
Sec. 559.052. [PROHIBITED] USE OF CREDIT INFORMATION
PROHIBITED. (a) An insurer may not:
(1) use an underwriting guideline [a credit score]
that is based wholly or partly on the credit information, credit
report, or credit score of an applicant for insurance coverage or of
any other person [computed using factors that constitute unfair
discrimination];
(2) refuse to underwrite [deny], cancel, or nonrenew a
policy of personal insurance based wholly or partly [solely] on the
[basis of] credit information, credit report, or credit score of an
applicant for insurance coverage or of any other person [without
considering any other applicable underwriting factor independent
of credit information]; [or]
(3) take an action that results in an adverse effect
against a consumer because the consumer does not have a credit card
account;
(4) charge an applicant for insurance coverage a
higher premium than otherwise would be charged based wholly or
partly on the credit information, credit report, or credit score of
the applicant or of any other person;
(5) rate a risk based wholly or partly on the credit
information, credit report, or credit score of an applicant for
insurance coverage or of any other person, including:
(A) providing or removing a discount;
(B) assigning the applicant for insurance
coverage to a rating tier; or
(C) placing an applicant for insurance coverage
with an affiliated company; or
(6) require a particular payment plan based wholly or
partly on the credit information, credit report, or credit score of
the applicant for insurance coverage or of any other person
[without considering any other applicable factor independent of
credit information].
(b) An insurer may not consider an absence of credit
information or an inability to determine credit information for an
applicant for insurance coverage or for an insured as a factor in
underwriting or rating an insurance policy [unless the insurer:
[(1) has statistical, actuarial, or reasonable
underwriting information that:
[(A) is reasonably related to actual or
anticipated loss experience; and
[(B) shows that the absence of credit information
could result in actual or anticipated loss differences;
[(2) treats the consumer as if the applicant for
insurance coverage or insured had neutral credit information, as
defined by the insurer; or
[(3) excludes the use of credit information as a
factor in underwriting and uses only other underwriting criteria].
SECTION 5. Section 2253.001, Insurance Code, is amended to
read as follows:
Sec. 2253.001. RATING TERRITORIES. [(a)] Notwithstanding
any other provision of this code, an insurer, in writing any
insurance in this state, including residential property or personal
automobile insurance, may use rating territories that subdivide a
county only if:
(1) the county is subdivided; and
(2) the rate for any subdivision in the county is not
greater than 15 percent higher than the rate used in any other
subdivision in the county by that insurer.
[(b) For residential property insurance or personal
automobile insurance, the commissioner by rule may allow a greater
rate difference than the rate difference specified by Subsection
(a).]
SECTION 6. The following laws are repealed:
(1) Sections 559.004(b), 559.051, 559.053, 559.054,
559.055, and 559.056, Insurance Code; and
(2) Subchapters C and D, Chapter 559, Insurance Code.
SECTION 7. (a) The changes in law made by this Act in
amending Chapter 559, Insurance Code, apply only to a personal
insurance policy:
(1) that is delivered, issued for delivery, or renewed
on or after January 1, 2010;
(2) the application for which is submitted on or after
January 1, 2010; or
(3) that is subject to determination of denial,
cancellation, or nonrenewal on or after January 1, 2010.
(b) A personal insurance policy delivered, issued for
delivery, or renewed before January 1, 2010, or the application for
which is submitted before January 1, 2010, is governed by the law as
it existed immediately before January 1, 2010, and that law is
continued in effect for that purpose.
SECTION 8. Section 2253.001, Insurance Code, as amended by
this Act, applies only to the rates applicable to insurance
policies that are delivered, issued for delivery, or renewed on or
after January 1, 2010. Rates applicable to policies that are
delivered, issued for delivery, or renewed before January 1, 2010,
are governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 9. This Act takes effect September 1, 2009.