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.