77R7986 MXM-D                           
         By Wise, Uresti, Hupp, et al.                          H.B. No. 530
         Substitute the following for H.B. No. 530:
         By Lewis of Tarrant                                C.S.H.B. No. 530
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to underwriting decisions based on credit reports;
 1-3     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 21.21-11 to read as follows:
 1-7           Art. 21.21-11.  UNDERWRITING DECISIONS BASED ON CREDIT
 1-8     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;
1-14                       (C)  credit capacity; or
1-15                       (D)  creditworthiness.
1-16                 (2)  "Insurer" means an insurer authorized to write
1-17     property and casualty insurance in this state, including:
1-18                       (A)  a county mutual insurance company;
1-19                       (B)  a Lloyd's plan;
1-20                       (C)  a reciprocal or interinsurance exchange; and
1-21                       (D)  a farm mutual company.
1-22           Sec. 2.  APPLICATION.  This article applies to:
1-23                 (1)  a personal automobile insurance policy;
1-24                 (2)  a homeowner's or farm or ranch owner's insurance
 2-1     policy; and
 2-2                 (3)  a standard fire insurance policy for a one-family
 2-3     dwelling, a duplex, or the contents of a one-family dwelling, a
 2-4     duplex, or an apartment.
 2-5           Sec. 3.  GENERAL RULE.  (a)  An insurer must provide its
 2-6     standards on the use of credit reports to the commissioner and the
 2-7     office of public insurance counsel before the insurer may make an
 2-8     underwriting decision based in whole or in part on a credit report.
 2-9           (b)  The standards provided under Subsection (a) must include
2-10     information sufficient to analyze the propriety of the reports for
2-11     underwriting purposes, including any algorithm, computer program,
2-12     model, or other process that reduces the data to a number or
2-13     rating.
2-14           (c)  This section does not prohibit an insurer from refusing
2-15     to allow premium payment in installments for a person whose failure
2-16     to pay premiums for an insurance policy caused a lapse in that
2-17     policy during the two years preceding the date on which the request
2-18     to pay premiums in installments is made.
2-19           Sec. 4.  CONFIDENTIALITY. (a)  An insurer that provides
2-20     information to the commissioner or the office of public insurance
2-21     counsel under this article may ask the commissioner to determine
2-22     whether the information is confidential under Section 552.110,
2-23     Government Code.
2-24           (b)  Until the commissioner makes the determination, the
2-25     information is confidential.
2-26           (c)  A determination that the information is confidential
2-27     does not apply to a hearing or other proceeding to determine
 3-1     whether an insurer has violated an antidiscrimination law of this
 3-2     state.
 3-3           Sec. 5.  PENALTY.  An insurer who violates this article
 3-4     commits an unfair practice in violation of Article 21.21 of this
 3-5     code and is subject to the penalties imposed under that article.
 3-6           SECTION 2.  This Act takes effect September 1, 2001, and
 3-7     applies only to an insurance policy that is delivered, issued for
 3-8     delivery, or renewed on or after January 1, 2002.  A policy that is
 3-9     delivered, issued for delivery, or renewed before January 1, 2002,
3-10     is governed by the law as it existed immediately before the
3-11     effective date of this Act, and that law is continued in effect for
3-12     that purpose.