Texas House Bill HB1626

Texas 2021 - 87th Regular

Caption

Relating to the use of credit scoring information by an insurer during and after a disaster.

Impact

The implementation of HB 1626 has significant implications for state insurance laws and regulations. It introduces a protective measure for policyholders that could alleviate financial burdens in the aftermath of disasters, a time when individuals are often already struggling. By limiting the use of credit information in determining insurance rates post-disaster, the bill seeks to promote fairness and stability in the insurance market, enhancing consumer trust and encouraging insurance coverage during turbulent periods. This reform aligns with broader consumer protection initiatives aimed at mitigating the negative impacts of natural catastrophes on residents.

Summary

House Bill 1626 addresses the use of credit scoring information by insurers during and after declared disasters. Specifically, it prohibits insurers from increasing an insured's premium or taking any adverse action based on changes in a consumer's credit report or credit score that occur during a disaster declaration period and for two years following such a declaration. This regulation is aimed at protecting consumers who may experience financial stress as a result of disasters, ensuring that their insurance costs do not increase due to factors outside their control during these challenging times.

Contention

Notable points of contention surrounding HB 1626 may include debates about the balance between regulatory oversight and the operational flexibility needed by insurers. While proponents argue that protecting consumers from premium increases based on fluctuating credit scores is essential for fairness and economic security, opponents might raise concerns regarding the potential impact on the insurance market. Critics may argue that limiting an insurer's ability to adjust rates in accordance with market conditions could lead to higher premiums for all insured individuals, as companies might seek to recoup potential losses elsewhere. This could spark discussions about the trade-offs between consumer protection and market dynamics in the insurance industry.