By Price H.B. No. 2175
74R7585 DLF-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to settlement of and payment of claims under an insurance
1-3 policy.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Article 21.56, Insurance Code, is amended to read
1-6 as follows:
1-7 Art. 21.56. NOTICE OF SETTLEMENT OF LIABILITY CLAIMS
1-8 Sec. 1. DEFINITIONS. In this article:
1-9 (1) "Claimant" means a person making a claim under an
1-10 insurance policy, including a person who is a claimant under
1-11 Section 1, Article 21.55, of this code, or a third-party claimant.
1-12 The term does not include a health care provider to whom a covered
1-13 person has assigned a benefit under a health insurance policy.
1-14 (2) "Insurer" has the meaning assigned by Section 1,
1-15 Article 21.55, of this code, except that the term also includes a
1-16 health maintenance organization operating under the Texas Health
1-17 Maintenance Organization Act (Chapter 20A, Vernon's Texas Insurance
1-18 Code) to the extent of any claim for payment for emergency care or
1-19 other claim for which reimbursement is authorized under the
1-20 evidence of coverage issued by that organization <(a) This article
1-21 applies only to settlement of a claim under a policy of casualty
1-22 insurance delivered, issued for delivery, or renewed in this state,
1-23 including a policy written by a county mutual insurance company,
1-24 Lloyd's plan company, surplus lines insurer, or a reciprocal or
2-1 interinsurance exchange. This article does not apply to a casualty
2-2 policy that requires the insured's consent to settlement of a claim
2-3 against the insured or to fidelity, surety, or guaranty bonds>.
2-4 Sec. 2. NOTICE TO NAMED INSURED. (a) <(b)> An insurer
2-5 shall notify the named insured in writing of initial offer to
2-6 compromise or settle a third-party claim against the insured made
2-7 under a <casualty> policy issued to the named insured. The notice
2-8 shall be given not later than the 10th day after the date on which
2-9 the offer is made.
2-10 (b) <(c)> An insurer shall notify the named insured in
2-11 writing of any settlement or other payment of a claim against the
2-12 insured made under a <casualty> policy issued to the named insured.
2-13 The notice shall be given not later than the 30th day after the
2-14 date of the settlement. The notice must include:
2-15 (1) the name of each claimant;
2-16 (2) details relating to the amount paid on the claim,
2-17 settlement of the claim, or judgment to be paid; and
2-18 (3) any other information required by rule of the
2-19 commissioner.
2-20 (c) This section does <(d) The board may adopt rules to
2-21 implement this article.>
2-22 <(e) The provisions of this article shall> not apply to
2-23 marine insurance other than inland marine insurance governed by
2-24 Article 5.53 of this code.
2-25 Sec. 3. CLAIMANT REPRESENTED BY ATTORNEY; NOTICE AND PAYMENT
2-26 TO CLAIMANT. (a) This section applies only if an insurer has
2-27 actual notice that a claimant is represented by an attorney with
3-1 respect to a claim.
3-2 (b) The insurer shall directly notify a claimant, in
3-3 writing, of any settlement of a claim with respect to which the
3-4 claimant is represented by an attorney. The notice shall state the
3-5 amount and date of the settlement. If the claimant is a minor or
3-6 has a legal guardian, the insurer shall notify a parent or legal
3-7 guardian of the claimant. Notice to the claimant's attorney does
3-8 not satisfy the requirement of this subsection.
3-9 (c) An insurer shall pay a claim with respect to which the
3-10 claimant is represented by an attorney by a negotiable instrument
3-11 payable jointly to the claimant and the attorney. If the claimant
3-12 is a minor or has a legal guardian, the negotiable instrument must
3-13 be payable jointly to the attorney and a parent or legal guardian
3-14 of the claimant. The negotiable instrument must be delivered to the
3-15 claimant or a parent or legal guardian of the claimant, as
3-16 appropriate. Delivery of the negotiable instrument to the
3-17 claimant's attorney does not satisfy the requirement of this
3-18 subsection.
3-19 Sec. 4. RULES. The commissioner may adopt rules to
3-20 implement this article.
3-21 SECTION 2. Article 21.59, Insurance Code, is repealed.
3-22 SECTION 3. This Act takes effect September 1, 1995, and
3-23 applies only to a claim under an insurance policy, contract, or
3-24 evidence coverage that is delivered, issued for delivery, or
3-25 renewed on or after January 1, 1996. A claim under policy,
3-26 contract, or evidence of coverage that is delivered, issued for
3-27 delivery, or renewed before January 1, 1996, is governed by the law
4-1 as it existed immediately before the effective date of this Act,
4-2 and that law is continued in effect for that purpose.
4-3 SECTION 4. The importance of this legislation and the
4-4 crowded condition of the calendars in both houses create an
4-5 emergency and an imperative public necessity that the
4-6 constitutional rule requiring bills to be read on three several
4-7 days in each house be suspended, and this rule is hereby suspended.