HBA-DMH H.B. 530 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 530
By: Wise
Insurance
2/12/2001
Introduced



BACKGROUND AND PURPOSE 

Current law does not prohibit an insurer from considering a person's credit
history when underwriting an insurance policy.  Some insurers run credit
checks when a policyholder renews or changes a policy.  A person's policy
may be canceled because of a poor credit rating even though the
policyholder consistently paid the premium on time.  According to the
Office of Public Insurance Counsel, in 1999, 32 percent of homeowners
insurance applicants and 46 percent of automobile insurance applicants were
denied coverage or renewal of their policy by insurance companies because
of their credit history.  House Bill 530 prohibits insurers from making
certain underwriting decisions based on credit history. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 530 amends the Insurance Code to prohibit an insurer from making
an underwriting decision based in whole or in part on a credit report.  The
prohibition applies to: 

_a personal automobile insurance policy;

_a homeowner's or farm or ranch owner's insurance policy; and

_a standard fire insurance policy for a one-family dwelling, duplex, or the
contents of a onefamily dwelling, a duplex, or an apartment. 

The bill provides that an insurer is not prohibited from refusing to allow
premium payment in installments for a person whose failure to pay premiums
for an insurance policy caused a lapse in that policy during the two years
preceding the date on which the request to pay premiums in installments is
made.  The bill provides that an insurer who violates the prohibition
commits an unfair practice in violation of provisions relating to unfair
competition and unfair practices and is subject to applicable penalties. 

EFFECTIVE DATE

September 1, 2001.  The Act applies only to an insurance policy that is
delivered, issued for delivery, or renewed on or after January 1, 2002.