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A BILL TO BE ENTITLED
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AN ACT
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relating to the use of a consumer's credit score in the underwriting |
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or rating of certain personal lines property and casualty insurance |
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policies. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 559.054(a), Insurance Code, is amended |
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to read as follows: |
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(a) If, based in whole or in part on information contained |
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in a credit report, an insurer takes an action resulting in an |
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adverse effect with respect to an applicant for insurance coverage |
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or insured, the insurer shall provide to the applicant or insured |
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within 30 days: |
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(1) written or electronic notice of the action |
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resulting in an adverse effect and the reasons for that action; |
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(2) the name, address, and telephone number of the |
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consumer reporting agency, including a toll-free number |
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established by the agency and the agency's Internet website, if |
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applicable; |
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(3) written or electronic notice that the consumer |
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reporting agency did not make the decision to take the action |
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resulting in an adverse effect and will be unable to provide the |
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applicant or insured the specific reasons why the action was taken; |
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[and] |
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(4) written or electronic notice of the applicant's or |
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insured's right to: |
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(A) obtain a free copy of the consumer's credit |
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report from the consumer reporting agency during the 60-day period |
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after the date of the notice; and |
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(B) dispute with the consumer reporting agency |
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the accuracy or completeness of any information in the consumer's |
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credit report furnished by the agency; and |
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(5) if applicable, written or electronic notice of the |
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insured's right to request the insurer re-underwrite and re-rate |
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the insured's insurance policy under Section 559.058(b)(1). |
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SECTION 2. Subchapter B, Chapter 559, Insurance Code, is |
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amended by adding Section 559.058 to read as follows: |
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Sec. 559.058. POLICY RE-RATING BASED ON UPDATED CREDIT |
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SCORE. (a) An insurer that uses credit scoring in the underwriting |
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or rating of insurance subject to this chapter shall: |
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(1) use a consumer's credit report issued not more than |
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90 days before the date the policy is first issued or renewed if the |
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insurer uses the report information to take an action that results |
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in an adverse effect with respect to the insured; |
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(2) review and update the credit report of an insured |
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not less than every 36 months; and |
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(3) reassess the insured's policy rating and adjust |
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premiums based on the updated credit score. |
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(b) On renewal of an insurance policy, the insurer: |
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(1) shall, on request of an insured or the insured's |
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agent, re-underwrite and re-rate the policy based upon a current |
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credit report or insurance score, not exceeding once each 12-month |
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period; and |
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(2) may obtain an insured's credit score in accordance |
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with the insurer's underwriting guidelines, regardless of whether |
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the renewal occurs before the expiration of the 36-month period |
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described by Subsection (a)(2). |
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(c) An insurer is not required to update an insured's credit |
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score and policy rating under this section if: |
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(1) the insured is in the most favorably priced tier of |
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the insurer within a group of affiliated insurers; |
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(2) credit scoring is not used in the underwriting or |
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rating of the insurance policy; or |
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(3) the insured's insurance product or type of |
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coverage does not rely on credit scoring as a factor. |
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SECTION 3. Subchapter B, Chapter 559, Insurance Code, as |
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amended by this Act, applies only to an insurance policy that is |
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delivered, issued for delivery, or renewed on or after January 1, |
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2026. An insurance policy delivered, issued for delivery, or |
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renewed before January 1, 2026, is governed by the law as it existed |
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immediately before the effective date of this Act, and that law is |
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continued in effect for that purpose. |
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SECTION 4. This Act takes effect September 1, 2025. |
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* * * * * |