KMS S.B. 1106 75(R)BILL ANALYSIS


INSURANCE
S.B. 1106
By: Duncan (Averitt)
5-1-97
Committee Report (Unamended)


BACKGROUND 

Currently, insurers are required to bring an action against a potentially
liable third party to recover the deductible on a motor vehicle policy for
a claim made by an insured.  The phrase "bring an action" has been
interpreted by the courts to mean filing a lawsuit.  This bill would
clarify the phrase "bring an action" to include collection efforts,
mediation, arbitration or litigation; and would require insurers to bring
an action within 12 months from the date a claim is made.  
 
PURPOSE

As proposed, S.B. 1106 clarifies the phrase "bring an action" and requires
insurers to bring an action within 12, rather than six, months from the
date a claim is made under Article 21.79E, Insurance Code, relating to an
action for amount of deductible by an insurer.    

RULEMAKING AUTHORITY

Rulemaking authority is granted to the commissioner of insurance in
SECTION 1 (Subsection (f), Article 21.79E, Insurance Code) of this bill.   

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Article 21.79E, Insurance Code, to read as follows:

(a) Provides that this article applies to any insurer who delivers, issues
for delivery, or renews a private passenger automobile policy of insurance
in this state, rather than a policy of motor vehicle insurance in this
state.  

(b) Requires an insurer to bring an action to recover a deductible against
a third party no later than 12, rather than six, months after payment of
its insured's claim or pay the amount of the deductible to the insured if
an insurer is liable to an insured for a claim, and such claim is subject
to a deductible payable by the insured, and a third party may be liable to
the insurer or the insured for the amount of the deductible.  

(c)   Provides that Subsection (b) of this article does not apply if, no
later than the earlier of 12, rather than six, months after the date the
insured's claim is paid, rather than made, or 90 days prior to the
expiration of the statute of limitations for negligence actions, the
insurer notifies the insured in writing that the insurer does, rather than
will, not intend to pursue further collection actions, rather than bring
an action, against the third party to pursue further collection actions.  

 (e)  Provides that this article is intended to encourage insurers to take
appropriate and necessary steps to collect from third parties or their
insurers.  Defines "bring an action."  

(f)  Authorizes the commissioner of insurance to have authority to enforce
this article and is to promulgate and enforce reasonable rules and
regulations as is necessary for the accomplishment of the purposes of this
article.  Makes conforming and nonsubstantive changes.  

SECTION 2. Effective date: September 1, 1997.

SECTION 3. Emergency clause.  Effective date: upon passage.