SRC-TAG, TJG S.B. 91 78(R)   BILL ANALYSIS


Senate Research Center   S.B. 91
78R1449 PB-FBy: West, Royce
Business & Commerce
3/7/2003
As Filed


DIGEST AND PURPOSE 

Currently, insurance underwriters can use an individual's credit history
to determine whether to approve, renew, deny, and set rates for applicants
for risk-based insurance.  As proposed, S.B. 91 prohibits insurance
underwriters from using credit history as a factor in approving, renewing,
denying, or setting the rates of risk-based insurance policies.  

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the commissioner of insurance
in SECTION 1 (Article 21.49-2R, Section 4, Insurance Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 21E, Insurance Code, by adding Article
21.49-2R, as follows: 

Art. 21.49-2R.  PROHIBITION ON USE OF UNDERWRITING BASED ON CREDIT SCORING

Sec. 1.  DEFINITIONS.  Defines " applicant for insurance coverage,"
"consumer reporting agency," "credit report," "credit score," "credit
scoring entity," "insurer," and "underwriting." 

Sec. 2.  APPLICATION.  Provides that this act applies only to certain
policies. 

Sec. 3.  PROHIBITION ON CERTAIN USE OF CREDIT SCORING BY INSURERS.
Prohibits an insurer, with respect to a line of insurance subject to this
article, from taking certain actions. 

Sec. 4.  RULES.  Authorizes the commissioner of insurance (commissioner)
to adopt rules as necessary to implement this article. 

Sec. 5.  PENALTY.  Provides that an insurer who violates this article
commits an unfair practice in violation of Article 21.21 of this code. 

SECTION 2.  Amends Chapter 21E, Insurance Code, by adding Article 21.79C,
as follows: 

Art. 21.79C.  INTERIM STUDY REGARDING USE OF INSURANCE CREDIT SCORES

Sec. 1.  DEFINITIONS.  Defines "consumer reporting agency," "credit
report," "credit score," "insurer," and "underwriting." 

Sec. 2.  INTERIM STUDY; REPORT.  (a) Requires the Department of Insurance
(department) to conduct an interim study regarding the use before January
1, 2004, of credit scores by insurers.  Requires the study to analyze
whether the use of credit scoring in underwriting insurance coverage had
an adverse impact on any demographic group defined by  race or
socioeconomic status. 

(b) Requires the commissioner to consult with representatives from certain
groups and with certain other persons, in conducting the study. 

(c) Requires the department to prepare a written report to the legislature
regarding the findings of the interim study.  Authorizes the report to
include any recommendations of the department regarding the use of credit
scores by insurers. 

(d) Requires the department, not later than September 1, 2004, to deliver
copies of the report to certain state officials. 

(e) Provides that this article expires September 1, 2005.

SECTION 3.  Makes the application of this Act prospective to January 1,
2004. 

SECTION 4.  Effective date: September 1, 2003.