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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 in the underwriting and rating |
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of certain insurance policies. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter A, Chapter 559, Insurance Code, is |
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amended by adding Section 559.0025 to read as follows: |
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Sec. 559.0025. SUSPENSION OF USE OF CREDIT SCORING. (a) An |
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insurer may not use credit scoring in the underwriting or rating of |
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an insurance policy to which this chapter applies and that is |
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delivered, issued for delivery, or renewed on or after January 1, |
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2018. |
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(b) This section expires January 1, 2020. |
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SECTION 2. (a) In this section: |
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(1) "Commissioner" means the commissioner of |
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insurance. |
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(2) "Committee" means the Committee on Insurer Use of |
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Credit Scoring. |
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(b) The commissioner shall establish the Committee on |
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Insurer Use of Credit Scoring to develop and make recommendations |
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on whether credit scoring should be used in the underwriting or |
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rating of insurance and if so, how the use of credit scoring may be |
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improved. The recommendations must also specifically address the |
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question of whether the lack of a credit score should ever influence |
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insurance rates. |
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(c) The committee is composed of nine members appointed by |
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the commissioner as follows: |
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(1) at least one representative of the insurance |
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industry; |
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(2) at least one representative of the Office of |
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Public Insurance Counsel; |
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(3) at least one policyholder who is not affiliated |
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with the insurance industry; and |
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(4) other members who represent one of the categories |
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listed in Subdivisions (1), (2), and (3) of this subsection. |
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(d) The commissioner shall designate one member to serve as |
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the presiding officer of the committee. |
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(e) A committee member is not entitled to compensation for |
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service on the committee but is entitled to reimbursement for |
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actual and necessary expenses incurred in performing committee |
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duties. |
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(f) The committee shall meet at least quarterly on the call |
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of the presiding officer. Committee meetings are subject to the |
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open meetings law, Chapter 551, Government Code. |
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(g) The Texas Department of Insurance shall provide |
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administrative support for the committee. Funding for the |
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administrative and operational expenses of the committee shall be |
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provided from the department's existing budget. |
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(h) The committee's development of recommendations under |
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this section must be based on a study of the effects of the use of |
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credit scoring in the underwriting and rating of insurance. The |
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study must, at a minimum, address and include findings regarding: |
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(1) the effect of credit scoring on: |
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(A) the elderly; |
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(B) young people; and |
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(C) people with little or no credit history, |
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including wealthy people; |
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(2) the range of effects that credit scoring has on |
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insurance rates; and |
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(3) the rate of errors in computing credit scores. |
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(i) The committee shall prepare a written report of the |
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committee's findings and recommendations under this section. The |
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committee shall deliver the report to the governor, the lieutenant |
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governor, and all members of the legislature not later than |
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December 1, 2018. |
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(j) The committee is abolished and this section expires June |
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1, 2019. |
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SECTION 3. This Act takes effect September 1, 2017. |