HOUSE COMMITTEE CONSIDERS CREDIT BAN

Members of the Texas House of Representatives Ins-urance Committee on Jan. 21 heard the views of consumers and their advocates, as well as insurers and their representatives, regarding House Bill 23, which would ban the use of credit history in rating insurance premiums. HB 23 is one of a number of bills filed during the current legislative session that address the use of credit information by insurers.

Consumers in support of the ban testified the practice is unfair for many reasons and discriminates against minorities and low-income individuals.

Insurers said HB 23 is unnecessary because measures enacted in 2003 included safeguards against using to their detriment the credit information of individuals who have suffered “extraordinary life circumstances” that adversely affected their credit rating.

Several testifying in favor of the bill related stories in which extraordinary circumstances, such as loss of a job and high medical bills, caused their credit rating to plummet and their homeowners insurance bills to skyrocket. However, most of the related cases occurred before the legislature implemented reforms in 2003.

Grilled by lawmakers, a representative from ChoicePoint Inc., which supplies insurance scores and scoring models to the insurance industry, said he was unable to tell them the error rate in either credit scores or insurance scores. Pointing out that ChoicePoint only deals with insurance scoring, he said, “Our error rate is what the credit reporting error rate is,” adding he did not know what ChoicePoint’s error rate is.