BWM H.B. 906 75(R)BILL ANALYSIS


FINANCIAL INSTITUTIONS
H.B. 906
By: McCall
3-4-97
Committee Report (Amended)



BACKGROUND 

Policyholders who have loss payees listed on their policies are often
placed in the position of dealing with demands for payment on the repairs
to their homes or automobiles.  They have no cash flow to make the
payments even though the loss was fully insured.  This occurs most often
simply because the lienholder does not make a priority of endorsing the
claim checks in a timely manner. 

PURPOSE

To expedite the processing of insurance claims.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency or
institution. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Title 132, Revised Statutes by adding Article 9031 as
follows: 

 Sec.1. The lienholder, not later than the 14th day after the date the
lienholder receives a  request for the endorsement or other approval,
shall: 
  
  (1)  provide the endorsement or other approval; or
  (2)  provide the person who requested the endorsement or other approval
a written          statement of the reason for denial of the endorsement
or other approval. 

 Sec.2. A lienholder who violates Section 1 of this article is liable for
a civil penalty not 
 to exceed $500 for each violation.

SECTION 2. Effective date.

SECTION 3. Emergency clause.

EXPLANATION OF AMENDMENTS

COMMITTEE AMENDMENT #1:  In order to avoid any possible attempts to
circumvent this requirement by referring to the claim check by another
term, Committee Amendment #1 inserts the term "draft" in addition to the
original term "check" in referencing this particular financial instrument.
This addition will help to insure the endorsement requirement applies to
all applicable claims.