HB2741 - Relating to prohibiting the use of credit scoring in certain lines of personal insurance.

      By: Martinez Fischer H.B. No. 2741       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 [ without considering any other   applicable factor independent of credit information ]; 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.          (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, 2026.          SECTION 5.  The following laws are repealed:                (1)  Section 559.004(b), Insurance Code;                (2)  Sections 559.003, 559.051, 559.053, 559.054, and   559.056, 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, 2026;                (2)  the application for which is submitted on or after   January 1, 2026; or                (3)  that is subject to determination of refusal to   underwrite, cancellation, or nonrenewal on or after January 1,   2026.          (b)  A personal insurance policy delivered, issued for   delivery, or renewed before January 1, 2026, or the application for   which is submitted before January 1, 2026, is governed by the law as   it existed immediately before January 1, 2026, and that law is   continued in effect for that purpose.          SECTION 7.  This Act takes effect September 1, 2025.