Press Release
From the Office of State Senator Rodney Ellis

For Immediate Release
February 1, 2005
Contact: Jeremy Warren, (512) 463-0113

Senator Rodney Ellis Condemns Credit Scoring Decision

Insurance Commissioner "turned his back" on minority Texans

(Austin)// -- Senator Rodney Ellis (D-Houston) today rebuked State Insurance Commissioner Jose Montemayor over his decision to do allow Texas insurance companies to continue using discriminatory credit scoring when pricing insurance policies.

"I am deeply disappointed by my good friend, Commissioner Montemayor's flawed decision on credit scoring," said Senator Ellis. "Texas Department of Insurance studies have flatly shown that credit scoring discriminates against African Americans, Hispanics and people with moderate incomes. With this decision, Commissioner Montemayor has turned his back on the Texans who most need his help."

Last December, a TDI study clearly demonstrated that credit scoring discriminates against and has a disproportionately negative impact on African Americans, Latinos, and people with moderate incomes. The study showed that credit scoring has a racially discriminatory effect. According to the study, African American Texans have a credit score that is, on average, 10% to 35% lower than a credit score of Anglo Texans; Hispanics have 5% to 25% lower credit score than Anglos.

"Do tornadoes avoid people with good credit scores?" asked Ellis. "Are African Americans and Hispanics -- who are far more likely to have negative credit scores -- far more likely to be bad drivers? If the answer is no, then why is credit scoring legal?"

More than 40 states have passed laws that, in one way or the other, restrict the use of credit scoring. Only Maryland has banned credit scoring for home insurance purposes. Last session, the Texas Legislature passed -- and Governor Perry signed -- SB 14, which gave the Texas Insurance Commissioner the authority to set the percentage amount by which the price of a home or auto policy can vary as a result of credit scoring.

"It doesn't matter if credit scoring is actuarially justifiable, it is morally unacceptable," said Senator Ellis. " Commissioner Montemayor needs to stand up for what is right and protect Texas consumers."