You are here:HomeIssuesInsurance Scoring & Underwriting Issues2003Texas DOI May Cap Amount Carriers Can Charge People With Poor Credit Scores

Texas DOI May Cap Amount Carriers Can Charge People With Poor Credit Scores

During a public hearing last week, Texas Insurance Commissioner Jose Montemayor said he will consider changing the amount that insurance companies can charge people who...
October 28, 2003

During a public hearing last week, Texas Insurance Commissioner Jose Montemayor said he will consider changing the amount that insurance companies can charge people who have poor credit scores. Consumers at the hearing asked that credit scoring-related rate adjustments be capped at 15 percent, while carriers asked for caps of as much as 60 percent, or no caps at all. Montemayor said after the hearing that he would take the issues under advisement. Under the law, he can't eliminate credit scoring altogether but can set differentials for companies that use the practice.

The hearing is part of a comprehensive review of insurance based credit scoring being conducted by the Texas Department of Insurance (TDI) to determine the accuracy of, and need for, the practice. All Texas insurers who use credit scoring in their underwriting practices were required to file their models with TDI in September 2003. Since that time, TDI staff has been reviewing those models to determine if they are in compliance with state law and sound actuarial practices. TDI will also review the underlying data that is entered into credit scoring models to determine whether the data provided by companies in justification of credit scoring models is valid.