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.