By Wise                                               H.B. No. 3364

         Line and page numbers may not match official copy.

         Bill not drafted by TLC or Senate E&E.

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to fraudulent statements in the filing of insurance

 1-3     claims.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Article 21.55(3)(b), Insurance Code, is amended

 1-6     and section 21.55(3)(h) is added to read as follows:

 1-7           Sec. 3(b):  If the insurer has a reasonable basis to believe

 1-8     that the loss results from arson or that the proof of loss contains

 1-9     fraudulent information, the insurer shall notify the claimant in

1-10     writing of the acceptance or rejection of the claim not later than

1-11     the 30th day after the date the insurer receives all items,

1-12     statements, and forms required by the insurer.

1-13           Sec. 3(h):  Should the proof of loss contain fraudulent

1-14     statements by the claimant amounting to more than 25 percent of the

1-15     monetary value of the claim, then the entire claim shall be

1-16     invalidated.  In the event that the claimant is able to show that

1-17     such alleged fraud is a result of an inadvertent mistake or

1-18     negligence, then the claim shall be reinstated.

1-19           SECTION 2.  Article 21.55(6), Insurance Code, is amended by

1-20     adding section (b) to read:

1-21           Sec. 6(a)  In all cases where a claim is made pursuant to a

1-22     policy of insurance and the insurer liable therefore is not in

 2-1     compliance with the requirements of this article, such insurer

 2-2     shall be liable to pay the holder of the policy, or the beneficiary

 2-3     making a claim under the policy, in addition to the amount of the

 2-4     claim, 18 percent per annum of the amount of such claim as damages,

 2-5     together with reasonable attorney fees.  If suit is filed, such

 2-6     attorney fees shall be taxed as part of the costs in the case.

 2-7           (b)  If the insurer continues to deny the claim under section

 2-8     (3)(h) and the claimant prevails through arbitration or litigation,

 2-9     then the insurer shall be liable for the penalties contained in

2-10     Section 16(b)(1), (2), and (3) or Article 21.21 of this code.

2-11           SECTION 3.  This Act takes effect September 1, 1997.

2-12           SECTION 4.  The importance of this legislation and the

2-13     crowded condition of the calendars in both houses create an

2-14     emergency and an imperative public necessity that the

2-15     constitutional rule requiring bills to be read on three several

2-16     days in each house be suspended, and this rule is hereby suspended.