By Puente H.B. No. 1533
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to certain practices relating to the use of attorneys by
1-3 insurance claimants.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter B, Chapter 21, Insurance Code, is
1-6 amended by adding Article 21.21C to read as follows:
1-7 Art. 21.21C. UNFAIR PRACTICES RELATING TO USE OF ATTORNEYS
1-8 FOR CERTAIN CLAIMS. (a) In this article:
1-9 (1) "Claimant" means an individual or entity known or
1-10 believed to have a claim against an insured for damage to or
1-11 destruction of property, bodily injury, or wrongful death.
1-12 (2) "Person" has the meaning assigned by Section 2,
1-13 Article 21.21, of this code.
1-14 (b) A person may not make or permit to be made a written or
1-15 oral communication to a claimant that in any manner discourages the
1-16 claimant from obtaining the services of an attorney to represent
1-17 the claimant with respect to the claimant's claim until the person
1-18 and the claimant have had an initial oral or written contact with
1-19 each other regarding the claim.
1-20 (c) A person commits an unfair and deceptive act or practice
1-21 in the business of insurance if the person violates Subsection (b)
1-22 of this article and is subject to each penalty and other sanction
1-23 provided by Article 21.21 of this code for that violation.
1-24 (d) Notwithstanding any other provision of this article, a
2-1 good faith effort to investigate, negotiate, settle, or adjust a
2-2 claim may not be considered a violation of this article.
2-3 (e) The commissioner may adopt rules to implement this
2-4 article.
2-5 SECTION 2. Subchapter E, Chapter 21, Insurance Code, is
2-6 amended by adding Article 21.56B to read as follows:
2-7 Art. 21.56B. INDEPENDENCE OF COUNSEL. (a) Under a personal
2-8 automobile insurance policy:
2-9 (1) the insurer shall notify the insured in writing of
2-10 the insured's right to retain, at the insured's expense, separate
2-11 counsel to represent the insured's interests; and
2-12 (2) the insurer may not, without the insured's written
2-13 consent, offer or provide to the insured the services of an
2-14 attorney in the employ of or under contract to the insurance
2-15 company in circumstances in which:
2-16 (A) a written notification has been given to the
2-17 insured that has the effect of reserving the rights of the
2-18 insurance carrier to assert any policy provision that would exclude
2-19 or deny coverage in whole or in part; or
2-20 (B) the amount of damages with respect to a
2-21 claim under a policy may reasonably be expected to exceed the
2-22 policy limits and a demand for policy limits or more has been made
2-23 in writing.
2-24 (b) An insurance company that, under a policy of casualty
2-25 insurance, is obligated to defend an insured under the policy, may
2-26 not offer or provide to the insured the services of an attorney in
2-27 the employ of or under contract to the insurance company unless
3-1 the insurance company complies with rules adopted by the
3-2 commissioner under this article.
3-3 (c) This article applies to any insurance company that
3-4 issues a policy of casualty insurance that is delivered, issued for
3-5 delivery, or renewed in this state, including a policy written by a
3-6 county mutual insurance company, Lloyd's plan company, surplus
3-7 lines insurer, or a reciprocal or interinsurance exchange.
3-8 SECTION 3. This Act takes effect September 1, 1999.
3-9 SECTION 4. Article 21.21C, Insurance Code, as added by this
3-10 Act, applies only to a communication made on or after January 1,
3-11 2000. A communication that is made before January 1, 2000, is
3-12 governed by the law as it existed immediately before the effective
3-13 date of this Act, and that law is continued in effect for that
3-14 purpose.
3-15 SECTION 5. (a) The commissioner of insurance shall adopt
3-16 the rules required by Article 21.56B, Insurance Code, as added by
3-17 this Act, not later than December 15, 1999.
3-18 (b) Article 21.56B, Insurance Code, as added by this Act,
3-19 applies only to an insurance policy that is delivered, issued for
3-20 delivery, or renewed on or after January 1, 2000. A policy that is
3-21 delivered, issued for delivery, or renewed before January 1, 2000,
3-22 is governed by the law as it existed immediately before the
3-23 effective date of this Act, and that law is continued in effect for
3-24 this purpose.
3-25 SECTION 6. The importance of this legislation and the
3-26 crowded condition of the calendars in both houses create an
3-27 emergency and an imperative public necessity that the
4-1 constitutional rule requiring bills to be read on three several
4-2 days in each house be suspended, and this rule is hereby suspended.