SRC-JBJ C.S.H.B. 3041 76(R)BILL ANALYSIS


Senate Research CenterC.S.H.B. 3041
By: Smithee (Sibley)
Economic Development
5/13/1999
Committee Report (Substituted)


DIGEST 

Currently, an insurer must comply with Insurance Code regulation in
responding to a claimant.  H.B. 3041 would change the time period in which
an eligible surplus lines insurer is required to acknowledge the receipt of
a claim, commence investigation of a claim, and request specified
information from the claimant.  The bill also requires insurers to mail a
copy of a claimant's policy to the claimant within certain time frames if
certain conditions are met and allows an insurer that receives a nonwritten
notice of a claim to notify the claimant that written notice is required,
as long as the notice is given on or before the third business day after
the date the insurer receives the unwritten notice.  C.S.H.B. 3041 would
also remove exemptions granted to certain types of insurance and bonds and
would provide damages and penalties for an insurer's noncompliance. 

PURPOSE

As proposed, C.S.H.B. 3041 amends regulations regarding prompt payment of
insurance claims.  

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 1(4), Article 21.55, Insurance Code, to redefine
"insurer." 

SECTION 2.  Amends Section 2, Article 21.55, Insurance Code, as follows:

Sec. 2.  New heading:  NOTICE OF CLAIM; INSURER REQUIREMENTS.  Requires
each insurer to mail to the claimant a complete copy of the insurance
policy if required to do so, and to request from and a third party all
statements and other items the insurer reasonably believes will be required
from a third party, by a certain date.  Requires the insurer to mail a
complete copy of the applicable insurance policy under Subsection (a) if,
in the notice of the claim, the claimant requests a copy and notifies the
insurer of a loss covered by the policy that is the result of a fire,
flood, natural disaster, or other circumstance in which it is reasonable to
assume that the claimant's copy of the policy has been lost or destroyed.
Authorizes the insurer to make additional requests for information from the
claimant, and to advise the claimant that written notice is required, if
the insurer receives a claim and determinates that the request is
reasonable and necessary.  Provides that an insurer who does not request
written notice is subject to each requirement applicable to a written
notice of claim, beginning on the date the insurer receives the nonwritten
notice of claim.  Requires an insurer who requests a written notice of
claim from a claimant under this subsection to respond to that written
notice, if received by the insurer, as required by this article.  Makes
conforming changes.  

SECTION 3.  Amends Sections 3(a) and (b), Article 21.55, Insurance Code, to
require an insurer to notify a claimant of the claim after the date the
insurer receives all forms reasonably required by the insurer from the
claimant or a third party, in order to secure final proof of loss.   Makes
conforming changes. 

SECTION 4.  Amends Section 6, Article 21.55, Insurance Code, to prohibit,
rather than authorize, certain insurers from denying liability for the
claim and is liable to pay the holder of the policy. Provides that the
damages begin to accrue on the date of violation and end on the date the
claim is paid in full. 
 
SECTION 5.Effective date: September 1, 1999.
  Makes application of this Act prospective.

SECTION 6. Emergency clause.