78R262 PB-D

By:  Turner of Harris                                             H.B. No. 45 



A BILL TO BE ENTITLED

AN ACT

relating to the use of certain insurance underwriting guidelines 
based on credit history; providing penalties.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subchapter B, Chapter 21, Insurance Code, is 
amended by adding Article 21.21-12 to read as follows:
	Art. 21.21-12.  PROHIBITION ON USE OF CERTAIN UNDERWRITING 
GUIDELINES BASED ON CREDIT HISTORY
	Sec. 1.  DEFINITIONS. In this article:                                  
		(1)  "Credit history" means information regarding an 
individual's past history of:
			(A)  financial responsibility;                                        
			(B)  payment habits; or                                               
			(C)  creditworthiness.                                                
		(2)  "Insurer" means an insurer authorized to write 
property and casualty insurance in this state, including:
			(A)  a county mutual insurer;                                         
			(B)  a farm mutual insurer;                                           
			(C)  a Lloyd's plan; and                                              
			(D)  a reciprocal or interinsurance exchange.                         
		(3)  "Underwriting guideline" means a rule, standard, 
marketing decision, or practice that is used by an insurer or an 
agent of an insurer to examine, bind, accept, reject, cancel, or 
limit insurance coverage to groups of consumers of insurance.
	Sec. 2.  APPLICATION. This article applies to:                          
		(1)  a personal automobile insurance policy;                           
		(2)  a homeowners or farm and ranch owners insurance 
policy; and     
		(3)  a standard fire insurance policy insuring a 
one-family dwelling, a duplex, or the contents of a one-family 
dwelling, a duplex, or an apartment.
	Sec. 3.  PROHIBITION; EXEMPTION. (a)  An insurer may not use 
an underwriting guideline that is based in whole or in part on the 
credit history or credit rating of any person, including the named 
insured under the insurance policy or the applicant who would be the 
named insured under the policy.
	(b)  This section does not apply to the use of a credit 
history or credit rating by an insurer solely to determine whether 
the insurer will offer an installment payment plan for the payment 
of premiums to an insured or applicant for insurance.
	Sec. 4.  RULES. The commissioner may adopt rules as 
necessary to implement this article.
	Sec. 5.  PENALTY. An insurer who violates this article 
commits an unfair practice in violation of Article 21.21 of this 
code and is subject to the penalties imposed under that article.
	SECTION 2.  Article 21.21-12, Insurance Code, as added by 
this Act, applies only to an insurance policy delivered, issued for 
delivery, or renewed on or after January 1, 2004.  A policy 
delivered, issued for delivery, or renewed before January 1, 2004, 
is governed by the law as it existed immediately before the 
effective date of this Act, and that law is continued in effect for 
that purpose.
	SECTION 3.  This Act takes effect September 1, 2003.