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.