By:  Van de Putte                                                         S.B. No. 99



A BILL TO BE ENTITLED

AN ACT

relating to prohibiting the use of credit scoring in underwriting 
certain consumer lines of insurance coverage; providing a penalty.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subchapter E, Chapter 21, Insurance Code, is 
amended by adding Article 21.49-2Q to read as follows:
	Art. 21.49-2Q.  PROHIBITION ON USE OF CERTAIN UNDERWRITING 
GUIDELINES BASED ON CREDIT SCORING
	Sec. 1.  DEFINITIONS.  In this article:                                 
		(1)  "Applicant for insurance coverage" includes an 
applicant for new coverage and a policyholder renewing coverage.
		(2)  "Consumer reporting agency" has the meaning 
assigned by Section 603, Fair Credit Reporting Act (15 U.S.C. 
Section 1681a), as amended.
		(3)  "Credit report" means a written or electronic 
communication of any information by a consumer reporting agency 
that:
			(A)  bears on an individual's creditworthiness, 
credit standing, or credit capacity; and
			(B)  is used or collected in whole or in part to 
serve as a factor in determining eligibility for insurance 
coverage.
		(4)  "Credit score" means a numerical representation of 
the risk presented by an individual that uses attributes of the 
individual derived from a credit report or other consumer or credit 
information in a formula to assess risk on an actuarial or 
statistical basis.
		(5)  "Insurer" means an insurer authorized to write 
property and casualty insurance in this state, including:
			(A)  a county mutual insurance company;                               
			(B)  a farm mutual insurance company;                                 
			(C)  a Lloyd's plan; and                                              
			(D)  a reciprocal or interinsurance exchange.                         
		(6)  "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 only to an 
insurer that writes:
		(1)  a personal automobile insurance policy;                           
		(2)  a homeowners insurance policy;                                    
		(3)  a farm and ranch or farm and ranch owners insurance 
policy; or  
		(4)  a residential fire and allied lines insurance 
policy.           
	Sec. 3.  PROHIBITION; EXEMPTION. (a)  An insurer may not use 
an underwriting guideline that is based in whole or in part on the 
credit report or credit score of an applicant for insurance 
coverage or any person other than the named applicant who would be 
insured under the policy.
	(b)  This section does not apply to the use of a credit report 
or credit score by an insurer solely to determine whether the 
insurer will offer an installment payment plan for the payment of 
premiums to an applicant for insurance coverage.
	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 21.49-2Q, 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.