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79R3066 KCR-D
By: Coleman H.B. No. 792
A BILL TO BE ENTITLED
AN ACT
relating to the use of certain rating practices in certain lines of
insurance.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Article 5.171, Insurance Code, is amended to
read as follows:
Art. 5.171. RATING TERRITORIES. Notwithstanding any other
provision of this code, an insurer, in writing any insurance in this
state including residential property or personal automobile
insurance, may not use rating territories that subdivide a county
unless:
(1) the county is subdivided; and
(2) the rate for any subdivisions within that county
is not greater than 15 percent higher than the rate used in any
other subdivisions in the county by that insurer[, except that the
commissioner may by rule allow a greater rate difference for
residential property insurance or personal automobile insurance].
SECTION 2. Sections 1(2), (4), and (7), Article 21.49-2U,
Insurance Code, are amended to read as follows:
(2) "Agent" means a person licensed or required to be
licensed as a general property and casualty insurance agent under
Subchapter B, C, D, or E, Chapter 4051 [Article 21.14 of this code].
(4) "Consumer" means an individual whose credit
information has been reported to or is in the possession of a
consumer reporting agency or an insurer [is used or whose credit
score is computed in the underwriting or rating of a personal
insurance policy]. The term includes an applicant for insurance
coverage.
(7) "Credit report" means any written, oral, or other
communication of information by a consumer reporting agency that[:
[(A)] bears on a consumer's creditworthiness,
credit standing, or credit capacity[; and
[(B) is used or expected to be used or collected
in whole or in part to serve as a factor to determine personal
insurance premiums, eligibility for coverage, or tier placement].
SECTION 3. Section 2, Article 21.49-2U, Insurance Code, is
amended to read as follows:
Sec. 2. APPLICATION. This article applies to each [an]
insurer that writes personal insurance coverage [and uses credit
information or credit reports for the underwriting or rating of
that coverage].
SECTION 4. Section 3, Article 21.49-2U, Insurance Code, is
amended to read as follows:
Sec. 3. [PROHIBITED] USE OF CREDIT INFORMATION PROHIBITED.
(a) An insurer may not:
(1) use an underwriting guideline [a credit score]
that is based, in whole or in part, on the credit information,
credit report, or credit score of an applicant for insurance
coverage or any other person other than the applicant who would be
insured under a policy of personal insurance [computed using
factors that constitute unfair discrimination];
(2) refuse to underwrite [deny], cancel, or nonrenew a
policy of personal insurance based, in whole or in part, [solely] on
the [basis of] credit information, credit report, or credit score
of an applicant for insurance coverage or any other person other
than the applicant who would be insured under the policy [without
consideration of any other applicable underwriting factor
independent of credit information]; [or]
(3) take an action that results in an adverse effect
against a consumer because the consumer does not have a credit card
account;
(4) charge an applicant for insurance coverage a
higher premium than otherwise would be charged based, in whole or in
part, on the credit information, credit report, or credit score of
the applicant or any other person other than the applicant who would
be insured under a policy of personal insurance;
(5) rate a risk based, in whole or in part, on the
credit information, credit report, or credit score of an applicant
for insurance coverage or any other person other than the applicant
who would be insured under a policy of personal insurance,
including:
(A) providing or removing a discount;
(B) assigning the applicant for insurance
coverage to a rating tier; or
(C) placing an applicant for insurance coverage
with an affiliated company; or
(6) require a particular payment plan based, in whole
or in part, on the credit information, credit report, or credit
score of the applicant for insurance coverage or any other person
other than the applicant who would be insured under a policy of
personal insurance [without consideration of any other applicable
factor independent of credit information].
(b) An insurer may not consider an absence of credit
information or an inability to determine credit information for an
applicant for insurance coverage or insured as a factor in
underwriting or rating an insurance policy [unless the insurer:
[(1) has statistical, actuarial, or reasonable
underwriting information that:
[(A) is reasonably related to actual or
anticipated loss experience; and
[(B) shows that the absence of credit information
could result in actual or anticipated loss differences;
[(2) treats the consumer as if the applicant for
insurance coverage or insured had neutral credit information, as
defined by the insurer; or
[(3) excludes the use of credit information as a
factor in underwriting and uses only other underwriting criteria].
SECTION 5. Section 16, Article 21.49-2U, Insurance Code, is
amended to read as follows:
Sec. 16. DUTIES OF DEPARTMENT. The department shall [:
[(1) update insurer profiles maintained on the
department's Internet website to provide information to consumers
stating whether or not an insurer uses credit scoring; and
[(2)] post the report required under Section 15 of
this article on the department's Internet website.
SECTION 6. Sections 4-11 and 13, Article 21.49-2U,
Insurance Code, are repealed.
SECTION 7. Article 5.171, Insurance Code, as amended by
this Act, applies only to the rates applicable to insurance
policies that are delivered, issued for delivery, or renewed on or
after January 1, 2006. Rates applicable to policies that are
delivered, issued for delivery, or renewed before January 1, 2006,
are 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 8. (a) Article 21.49–2U, as amended by this Act,
applies only to a personal insurance policy:
(1) that is delivered, issued for delivery, or renewed
on or after January 1, 2006;
(2) the application for which is submitted on or after
January 1, 2006; or
(3) that is subject to determination of denial,
cancellation, or nonrenewal on or after January 1, 2006.
(b) A personal insurance policy delivered, issued for
delivery, or renewed before January 1, 2006, or the application for
which is submitted before January 1, 2006, is governed by the law as
it existed immediately before January 1, 2006, and that law is
continued in effect for that purpose.
SECTION 9. This Act takes effect September 1, 2005.