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A BILL TO BE ENTITLED
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AN ACT
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relating to the use of credit scoring and rating territories in |
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writing certain lines of personal insurance. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Sections 559.001(4), (7), and (8), Insurance |
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Code, are amended to read as follows: |
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(4) "Consumer" means an individual whose credit |
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information has been reported to or is in the possession of a |
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consumer reporting agency or insurer [is used or whose credit score
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is computed in the underwriting or rating of a personal insurance
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policy]. The term includes an applicant for insurance coverage. |
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(7) "Credit report" means any written, oral, or other |
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communication of information by a consumer reporting agency that[:
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[(A)] bears on a consumer's creditworthiness, |
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credit standing, or credit capacity[; and
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[(B)
is used or expected to be used or collected
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in whole or in part to serve as a factor to determine personal
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insurance premiums, eligibility for coverage, or tier placement]. |
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(8) "Credit score" or "insurance score" means a number |
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or rating derived from an algorithm, computer application, model, |
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or other process that is[:
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[(A)] based on credit information[; and
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[(B)
used to predict the future insurance loss
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exposure of a consumer]. |
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SECTION 2. Section 559.002, Insurance Code, is amended to |
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read as follows: |
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Sec. 559.002. APPLICABILITY OF CHAPTER. This chapter |
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applies to each [an] insurer that writes personal insurance |
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coverage [and uses credit information or credit reports for the
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underwriting or rating of that coverage]. |
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SECTION 3. Section 559.003, Insurance Code, is amended to |
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read as follows: |
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Sec. 559.003. INFORMATION PROVIDED TO PUBLIC. The |
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department shall[:
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[(1)
update insurer profiles maintained on the
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department's Internet website to provide information to consumers
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stating whether or not an insurer uses credit scoring; and
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[(2)] post the report required under former Section |
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15, Article 21.49-2U, on the department's Internet website. |
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SECTION 4. Section 559.052, Insurance Code, is amended to |
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read as follows: |
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Sec. 559.052. [PROHIBITED] USE OF CREDIT INFORMATION |
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PROHIBITED. (a) An insurer may not: |
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(1) use an underwriting guideline [a credit score] |
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that is based wholly or partly on the credit information, credit |
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report, or credit score of an applicant for insurance coverage or of |
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any other person [computed using factors that constitute unfair
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discrimination]; |
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(2) refuse to underwrite [deny], cancel, or nonrenew a |
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policy of personal insurance based wholly or partly [solely] on the |
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[basis of] credit information, credit report, or credit score of an |
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applicant for insurance coverage or of any other person [without
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considering any other applicable underwriting factor independent
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of credit information]; [or] |
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(3) take an action that results in an adverse effect |
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against a consumer because the consumer does not have a credit card |
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account; |
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(4) charge an applicant for insurance coverage a |
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higher premium than otherwise would be charged based wholly or |
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partly on the credit information, credit report, or credit score of |
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the applicant or of any other person; |
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(5) rate a risk based wholly or partly on the credit |
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information, credit report, or credit score of an applicant for |
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insurance coverage or of any other person, including: |
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(A) providing or removing a discount; |
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(B) assigning the applicant for insurance |
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coverage to a rating tier; or |
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(C) placing an applicant for insurance coverage |
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with an affiliated company; or |
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(6) require a particular payment plan based wholly or |
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partly on the credit information, credit report, or credit score of |
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the applicant for insurance coverage or of any other person |
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[without considering any other applicable factor independent of
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credit information]. |
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(b) An insurer may not consider an absence of credit |
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information or an inability to determine credit information for an |
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applicant for insurance coverage or for an insured as a factor in |
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underwriting or rating an insurance policy [unless the insurer:
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[(1)
has statistical, actuarial, or reasonable
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underwriting information that:
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[(A)
is reasonably related to actual or
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anticipated loss experience; and
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[(B)
shows that the absence of credit information
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could result in actual or anticipated loss differences;
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[(2)
treats the consumer as if the applicant for
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insurance coverage or insured had neutral credit information, as
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defined by the insurer; or
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[(3)
excludes the use of credit information as a
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factor in underwriting and uses only other underwriting criteria]. |
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SECTION 5. Section 2253.001, Insurance Code, is amended to |
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read as follows: |
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Sec. 2253.001. RATING TERRITORIES. [(a)] Notwithstanding |
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any other provision of this code, an insurer, in writing any |
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insurance in this state, including residential property or personal |
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automobile insurance, may use rating territories that subdivide a |
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county only if: |
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(1) the county is subdivided; and |
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(2) the rate for any subdivision in the county is not |
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greater than 15 percent higher than the rate used in any other |
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subdivision in the county by that insurer. |
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[(b)
For residential property insurance or personal
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automobile insurance, the commissioner by rule may allow a greater
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rate difference than the rate difference specified by Subsection
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(a).] |
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SECTION 6. The following laws are repealed: |
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(1) Sections 559.004(b), 559.051, 559.053, 559.054, |
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559.055, and 559.056, Insurance Code; and |
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(2) Subchapters C and D, Chapter 559, Insurance Code. |
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SECTION 7. (a) The changes in law made by this Act in |
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amending Chapter 559, Insurance Code, apply only to a personal |
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insurance policy: |
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(1) that is delivered, issued for delivery, or renewed |
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on or after January 1, 2010; |
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(2) the application for which is submitted on or after |
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January 1, 2010; or |
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(3) that is subject to determination of denial, |
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cancellation, or nonrenewal on or after January 1, 2010. |
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(b) A personal insurance policy delivered, issued for |
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delivery, or renewed before January 1, 2010, or the application for |
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which is submitted before January 1, 2010, is governed by the law as |
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it existed immediately before January 1, 2010, and that law is |
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continued in effect for that purpose. |
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SECTION 8. Section 2253.001, Insurance Code, as amended by |
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this Act, applies only to the rates applicable to insurance |
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policies that are delivered, issued for delivery, or renewed on or |
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after January 1, 2010. Rates applicable to policies that are |
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delivered, issued for delivery, or renewed before January 1, 2010, |
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are governed by the law as it existed immediately before the |
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effective date of this Act, and that law is continued in effect for |
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that purpose. |
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SECTION 9. This Act takes effect September 1, 2009. |