HBA-DMH H.B. 530 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 530 By: Wise Insurance 2/12/2001 Introduced BACKGROUND AND PURPOSE Current law does not prohibit an insurer from considering a person's credit history when underwriting an insurance policy. Some insurers run credit checks when a policyholder renews or changes a policy. A person's policy may be canceled because of a poor credit rating even though the policyholder consistently paid the premium on time. According to the Office of Public Insurance Counsel, in 1999, 32 percent of homeowners insurance applicants and 46 percent of automobile insurance applicants were denied coverage or renewal of their policy by insurance companies because of their credit history. House Bill 530 prohibits insurers from making certain underwriting decisions based on credit history. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 530 amends the Insurance Code to prohibit an insurer from making an underwriting decision based in whole or in part on a credit report. The prohibition applies to: _a personal automobile insurance policy; _a homeowner's or farm or ranch owner's insurance policy; and _a standard fire insurance policy for a one-family dwelling, duplex, or the contents of a onefamily dwelling, a duplex, or an apartment. The bill provides that an insurer is not prohibited from refusing to allow premium payment in installments for a person whose failure to pay premiums for an insurance policy caused a lapse in that policy during the two years preceding the date on which the request to pay premiums in installments is made. The bill provides that an insurer who violates the prohibition commits an unfair practice in violation of provisions relating to unfair competition and unfair practices and is subject to applicable penalties. EFFECTIVE DATE September 1, 2001. The Act applies only to an insurance policy that is delivered, issued for delivery, or renewed on or after January 1, 2002.