By Wise                                                H.B. No. 530
         77R1300 MXM-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 21.21-11 to read as follows:
 1-7           Art. 21.21-11.  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 insurer;
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, 2001, and
2-16     applies only to an insurance policy that is delivered, issued for
2-17     delivery, or renewed on or after January 1, 2002.  A policy that is
2-18     delivered, issued for delivery, or renewed before January 1, 2002,
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.