78R337 PB-F
By: Gutierrez H.B. No. 696
A BILL TO BE ENTITLED
AN ACT
relating to the prohibition of the use of credit reports in certain
insurance underwriting decisions; providing penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter E, Chapter 21, Insurance Code, is
amended by adding Article 21.49-2H to read as follows:
Art. 21.49-2H. PROHIBITION ON USE OF CERTAIN UNDERWRITING
GUIDELINES BASED ON CREDIT REPORT
Sec. 1. DEFINITIONS. In this article:
(1) "Applicant for insurance coverage" includes an
applicant for new coverage and a policyholder renewing coverage.
(2) "Credit report" means a report regarding an
individual's past history of:
(A) financial responsibility;
(B) payment habits; or
(C) creditworthiness.
(3) "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.
Sec. 2. APPLICATION. This article applies only to an
insurer that writes:
(1) a personal automobile insurance policy;
(2) a homeowners or farm and ranch owners insurance
policy; or
(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 make
an underwriting decision regarding an applicant for insurance
coverage or an insured based in whole or in part on a credit report
relating to that individual.
(b) This section does not prohibit an insurer from refusing
to allow an applicant for insurance or an insured to pay premiums
under an installment payment plan if the failure of that individual
to pay premiums for coverage under an insurance policy caused a
lapse in coverage under that policy during the two years preceding
the date on which the request to pay premiums in installments is
made.
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.
SECTION 2. Article 21.49-2H, 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.