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.