What's New
On Oct. 25, 2005, the Insurance Journal reported that under an agreement with Delaware Insurance Commissioner Matt Denn, the Hartford insurance company has made refunds totaling $135,000 to 1,400 Delaware consumers it wrongly scored as bad insurance risks by miscalculating their credit scores. What does your credit score have to do with your insurance risk anyway? Nothing, in the view of leading consumer groups like TexPIRG, Consumers Union, Consumer Federation of America and the Center for Economic Justice.
How You Can Help
Ask the Legislature to ban insurance credit scoring by passing HB 23.
A Brief Summary
On June 11, 2003, Governor Perry signed a much-heralded package of insurance
reforms into law. The legislation, SB 14, came in response to skyrocketting
homeowners insurance rates and unfair practices by the insurance industry taking
advantage of the deregulated market in Texas. SB 14 closed the loophole that
exempted 95 percent of insurance policies from regulation and gave new powers
to the Insurance Commissioner to stop unfair insurance practices. Unfortunately,
the Legislature failed to enact promised rate rollbacks, failed to ban unfair
credit-scoring practices, and failed to set up a regulatory system strong enough
to prevent another crisis.
A year and a half later,
promised rate reductions have yet to appear. Spiting consumers and the state
alike, insurance companies are doing everything they can to keep premiums high.
They’re offering policies with less coverage at higher rates, fighting state-ordered
cuts in court, and continuing to pry into private credit records as a way to
raise rates or deny coverage from many Texans.
While the Legislature failed
to pass a TexPIRG-backed complete ban on credit scoring, they recognized the
unfair, inaccurate practice needed to have some restrictions and directed the
Insurance commissioner to limit how much insurance companies can raise rates
based on your credit history. Unfortunately, Commissioner Montemayor, an appointee
of Governor Perry, has failed to adopt a rule and has not taken action against
any individual credit scoring model or insurer using credit scoring.
It’s time for the Legislature
to finish the job of insurance reform. They need to create stiff penalties for
companies who refuse to comply with the law and reduce their rates. They also
need to ban insurance credit scoring once and for all. More.
In The News
Article by the El Paso Times, Senate
approves bill to overhaul insurance rates, 4/3/03
Article by the Express-News, Senate
insurance bill makes few happy, 4/3/03
Article on News 8 Austin, Senate
passes homeowners insurance bill, 4/2/03
Opinion Editorial in the Houston Chronicle, Credit
scoring adds up to unfair for most Texans, 2/27/03
Opinion Editorial on DallasNews.com, Luke
Metzger: We are paying for stock gamble by insurers, 1/19/03
Opinion Editorial in the Houston Chronicle, Insurance
industry gambled our money and lost 1/6/03
News Releases
Advocacy Groups
Call For End to Discriminatory Insurance Practices 1/10/05
One In Four Credit Reports Contains Errors Serious Enough To Wreak Havoc For
Consumers 6/17/04
TexPIRG Warns That Holiday Shopping Sprees Could Lead To Higher Insurance Rates
12/12/02
Links
www.texaswatch.org
www.cej-online.org
http://www.aarp.org/states/tx/
