By Alvarado                                      H.B. No. 671

      75R3227 SAW-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to a prohibition of certain underwriting decisions based

 1-3     on credit reports; providing a penalty.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Subchapter B, Chapter 21, Insurance Code, is

 1-6     amended by adding Article 21.21-9 to read as follows:

 1-7           Art. 21.21-9.  PROHIBITION OF CERTAIN UNDERWRITING DECISIONS

 1-8     BASED ON CREDIT REPORTS

 1-9           Sec. 1.  DEFINITIONS.  In this article:

1-10                 (1)  "Credit report" means a report regarding an

1-11     individual's:

1-12                       (A)  financial responsibility;

1-13                       (B)  payment habits; or

1-14                       (C)  creditworthiness.

1-15                 (2)  "Insurer" means an insurer authorized to write

1-16     property and casualty insurance in this state, including:

1-17                       (A)  a county mutual insurance company;

1-18                       (B)  a Lloyd's plan company;

1-19                       (C)  a reciprocal or interinsurance exchange; and

1-20                       (D)  a farm mutual company.

1-21           Sec. 2.  APPLICATION.  This article applies to:

1-22                 (1)  a personal automobile insurance policy;

1-23                 (2)  a homeowner's or farm or ranch owner's insurance

1-24     policy; and

 2-1                 (3)  a standard fire insurance policy for a one-family

 2-2     dwelling, a duplex, or the contents of a one-family dwelling, a

 2-3     duplex, or an apartment.

 2-4           Sec. 3.  PROHIBITION; EXEMPTION.  (a)  An insurer may not

 2-5     make an underwriting decision based in whole or in part on a credit

 2-6     report.

 2-7           (b)  This section does not prohibit an insurer from refusing

 2-8     to allow premium payment in installments for a person whose failure

 2-9     to pay premiums for an insurance policy caused a lapse in that

2-10     policy during the two years preceding the date on which the request

2-11     to pay premiums in installments is made.

2-12           Sec. 4.  PENALTY.  An insurer who violates this article

2-13     commits an unfair practice in violation of Article 21.21 of this

2-14     code and is subject to the penalties imposed under that article.

2-15           SECTION 2.  This Act takes effect September 1, 1997, and

2-16     applies only to an insurance policy that is delivered, issued for

2-17     delivery, or renewed on or after January 1, 1998.  A policy that is

2-18     delivered, issued for delivery, or renewed before January 1, 1998,

2-19     is governed by the law as it existed immediately before the

2-20     effective date of this Act, and that law is continued in effect for

2-21     that purpose.

2-22           SECTION 3.  The importance of this legislation and the

2-23     crowded condition of the calendars in both houses create an

2-24     emergency and an imperative public necessity that the

2-25     constitutional rule requiring bills to be read on three several

2-26     days in each house be suspended, and this rule is hereby suspended.