Gutierrez Bill Bars Insurers From Using Your Credit Score

The text as introduced · 926 words

90R1357 SCR-D

By: Gutierrez, Cook of Harris
S.B. No. 309

A BILL TO BE ENTITLED

AN ACT

relating to prohibiting the use of credit scoring in certain lines

of personal insurance.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Sections 559.001(2), (4), and (7), 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 [ or a

personal lines property and casualty agent ] under Subchapter B, C,

or E, Chapter 4051.

(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 2. Section 559.002, Insurance Code, is amended to

read as follows:

Sec. 559.002. APPLICABILITY OF CHAPTER. This chapter

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 3. Section 559.052, Insurance Code, is amended to

read as follows:

Sec. 559.052. [ PROHIBITED ] USE OF CREDIT INFORMATION

PROHIBITED . (a) An insurer may not:

(1) use an underwriting guideline [ a credit score ]

that is based wholly or partly on the credit information, credit

report, or credit score of an applicant for insurance coverage or

any 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 or [ deny, ] cancel[ , ] or

nonrenew a policy of personal insurance based wholly or partly

[ solely ] on the [ basis of ] credit information , credit report, or

credit score of an applicant for insurance coverage or any person

other than the applicant who would be insured under the policy

[ without considering 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 wholly or

partly on the credit information, credit report, or credit score of

the applicant or any person other than the applicant who would be

insured under a policy of personal insurance;

(5) rate a risk based wholly or partly on the credit

information, credit report, or credit score of an applicant for

insurance coverage or any 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 wholly or

partly on the credit information, credit report, or credit score of

the applicant for insurance coverage or any person other than the

applicant who would be insured under a policy of personal insurance

[ without considering 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 for an 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 4. Section 559.055, Insurance Code, is amended by

adding Subsection (c) to read as follows:

(c) This section expires September 1, 2028.

SECTION 5. The following laws are repealed:

(1) Section 559.004(b), Insurance Code;

(2) Sections 559.003, 559.051, 559.053, 559.054,

559.056, and 559.058, Insurance Code; and

(3) Subchapters C and D, Chapter 559, Insurance Code.

SECTION 6. (a) The changes in law made by this Act apply

only to a personal insurance policy:

(1) that is delivered, issued for delivery, or renewed

on or after January 1, 2028;

(2) the application for which is submitted on or after

January 1, 2028; or

(3) that is subject to determination of refusal to

underwrite, cancellation, or nonrenewal on or after January 1,

2028.

(b) A personal insurance policy delivered, issued for

delivery, or renewed before January 1, 2028, or the application for

which is submitted before January 1, 2028, is governed by the law as

it existed immediately before January 1, 2028, and that law is

continued in effect for that purpose.

SECTION 7. This Act takes effect September 1, 2027.