By: Schwertner S.B. No. 1644
A BILL TO BE ENTITLED
AN ACT
relating to the use of a consumer's credit score in the underwriting
or rating of certain personal lines property and casualty insurance
policies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 559.054(a), Insurance Code, is amended
to read as follows:
(a) If, based in whole or in part on information contained
in a credit report, an insurer takes an action resulting in an
adverse effect with respect to an applicant for insurance coverage
or insured, the insurer shall provide to the applicant or insured
within 30 days:
(1) written or electronic notice of the action
resulting in an adverse effect and the reasons for that action;
(2) the name, address, and telephone number of the
consumer reporting agency, including a toll-free number
established by the agency and the agency's Internet website, if
applicable;
(3) written or electronic notice that the consumer
reporting agency did not make the decision to take the action
resulting in an adverse effect and will be unable to provide the
applicant or insured the specific reasons why the action was taken;
[and]
(4) written or electronic notice of the applicant's or
insured's right to:
(A) obtain a free copy of the consumer's credit
report from the consumer reporting agency during the 60-day period
after the date of the notice; and
(B) dispute with the consumer reporting agency
the accuracy or completeness of any information in the consumer's
credit report furnished by the agency; and
(5) if applicable, written or electronic notice of the
insured's right to request the insurer re-underwrite and re-rate
the insured's insurance policy under Section 559.058(b)(1).
SECTION 2. Subchapter B, Chapter 559, Insurance Code, is
amended by adding Section 559.058 to read as follows:
Sec. 559.058. POLICY RE-RATING BASED ON UPDATED CREDIT
SCORE. (a) An insurer that uses credit scoring in the underwriting
or rating of insurance subject to this chapter shall:
(1) use a consumer's credit report issued not more than
90 days before the date the policy is first issued or renewed if the
insurer uses the report information to take an action that results
in an adverse effect with respect to the insured;
(2) review and update the credit report of an insured
not less than every 36 months; and
(3) reassess the insured's policy rating and adjust
premiums based on the updated credit score.
(b) On renewal of an insurance policy, the insurer:
(1) shall, on request of an insured or the insured's
agent, re-underwrite and re-rate the policy based upon a current
credit report or insurance score, not exceeding once each 12-month
period; and
(2) may obtain an insured's credit score in accordance
with the insurer's underwriting guidelines, regardless of whether
the renewal occurs before the expiration of the 36-month period
described by Subsection (a)(2).
(c) An insurer is not required to update an insured's credit
score and policy rating under this section if:
(1) the insured is in the most favorably priced tier of
the insurer within a group of affiliated insurers;
(2) credit scoring is not used in the underwriting or
rating of the insurance policy; or
(3) the insured's insurance product or type of
coverage does not rely on credit scoring as a factor.
SECTION 3. Subchapter B, Chapter 559, Insurance Code, as
amended by this Act, applies only to an insurance policy that is
delivered, issued for delivery, or renewed on or after January 1,
2026. An insurance policy delivered, issued for delivery, or
renewed before January 1, 2026, is 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 4. This Act takes effect September 1, 2025.