By:  Wise                                                         H.B. No. 81 



A BILL TO BE ENTITLED

AN ACT

relating to a prohibition of certain underwriting decisions based 
on credit reports; providing a penalty.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.   Subchapter B, Chapter 21, Insurance Code, is 
amended by adding Article 21.21-11 to read as follows:
	Art. 21.21-11.  PROHIBITION OF CERTAIN UNDERWRITING 
DECISIONS BASED ON CREDIT REPORTS
	Sec. 1.  DEFINITIONS. In this article:                                  
		(1)  "Credit report" means a report regarding an 
individual's:       
			(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 insurance company;                               
			(B)  a Lloyd's plan insurer;                                          
			(C)  a reciprocal or interinsurance exchange; and                     
			(D)  a farm mutual company.                                           
	Sec. 2.  APPLICATION. This article applies to:                          
		(1)  a personal automobile insurance policy;                           
		(2)  a homeowner's or farm or ranch owner's insurance 
policy; and    
		(3)  a standard fire insurance policy for 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 make 
an underwriting decision based in whole or in part on a credit 
report.
	(b)  This section does not prohibit an insurer from refusing 
to allow premium payment in installments for a person whose failure 
to pay premiums for an insurance policy caused a lapse in that 
policy during the two years preceding the date on which the request 
to pay premiums in installments is made.
	Sec. 4.  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.   This Act takes effect September 1, 2003, and 
applies only to an insurance policy that is delivered, issued for 
delivery, or renewed on or after January 1, 2002.  A policy that is 
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.