85R1727 SCL-D
By: White H.B. No. 127
A BILL TO BE ENTITLED
AN ACT
relating to the use of credit scoring in the underwriting and rating
of certain insurance policies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 559, Insurance Code, is
amended by adding Section 559.0025 to read as follows:
Sec. 559.0025. SUSPENSION OF USE OF CREDIT SCORING. (a) An
insurer may not use credit scoring in the underwriting or rating of
an insurance policy to which this chapter applies and that is
delivered, issued for delivery, or renewed on or after January 1,
2018.
(b) This section expires January 1, 2020.
SECTION 2. (a) In this section:
(1) "Commissioner" means the commissioner of
insurance.
(2) "Committee" means the Committee on Insurer Use of
Credit Scoring.
(b) The commissioner shall establish the Committee on
Insurer Use of Credit Scoring to develop and make recommendations
on whether credit scoring should be used in the underwriting or
rating of insurance and if so, how the use of credit scoring may be
improved. The recommendations must also specifically address the
question of whether the lack of a credit score should ever influence
insurance rates.
(c) The committee is composed of nine members appointed by
the commissioner as follows:
(1) at least one representative of the insurance
industry;
(2) at least one representative of the Office of
Public Insurance Counsel;
(3) at least one policyholder who is not affiliated
with the insurance industry; and
(4) other members who represent one of the categories
listed in Subdivisions (1), (2), and (3) of this subsection.
(d) The commissioner shall designate one member to serve as
the presiding officer of the committee.
(e) A committee member is not entitled to compensation for
service on the committee but is entitled to reimbursement for
actual and necessary expenses incurred in performing committee
duties.
(f) The committee shall meet at least quarterly on the call
of the presiding officer. Committee meetings are subject to the
open meetings law, Chapter 551, Government Code.
(g) The Texas Department of Insurance shall provide
administrative support for the committee. Funding for the
administrative and operational expenses of the committee shall be
provided from the department's existing budget.
(h) The committee's development of recommendations under
this section must be based on a study of the effects of the use of
credit scoring in the underwriting and rating of insurance. The
study must, at a minimum, address and include findings regarding:
(1) the effect of credit scoring on:
(A) the elderly;
(B) young people; and
(C) people with little or no credit history,
including wealthy people;
(2) the range of effects that credit scoring has on
insurance rates; and
(3) the rate of errors in computing credit scores.
(i) The committee shall prepare a written report of the
committee's findings and recommendations under this section. The
committee shall deliver the report to the governor, the lieutenant
governor, and all members of the legislature not later than
December 1, 2018.
(j) The committee is abolished and this section expires June
1, 2019.
SECTION 3. This Act takes effect September 1, 2017.