RS H.B. 671 75(R)BILL ANALYSIS INSURANCE H.B. 671 By: Alvarado 4-18-97 Committee Report (Unamended) BACKGROUND Currently, an insurer may base certain underwriting decisions upon a person's credit history even though one's credit history has no direct connection to one's need for or ability to pay for insurance coverage. PURPOSE As proposed, H.B. 671 would prohibit an insurer from considering a person's credit history in the decision to sell insurance coverage to that individual. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter B, Chapter 21, Insurance Code by adding Article 21.21-9. Art. 21.21-9. PROHIBITION OF CERTAIN UNDERWRITING DECISIONS BASED ON CREDIT REPORTS. Sec. 1. Definitions. Defines "credit report" and "insurer". Sec. 2. Application. This article applies to (1) personal automobile policies (2) homeowner's, farm or ranch owner's policy and (3) a standard fire insurance policy. Sec. 3. Prohibition; Exemption. (a) Prohibits an insurer from making an underwriting decision based on a credit report. (b) Provides that an insurer may refuse to allow premium payment installments to a person whose failure to pay for a policy caused a lapse in that policy during the two preceding years. Sec. 4. Penalty. Violation of this article is an unfair practice as defined by Article 21.21, Texas Insurance Code. SECTION 2. Effective Date, September 1, 1997, and applies to policies issued or renewed on or after January 1, 1998. SECTION 3. Emergency Clause.