By Smithee H.B. No. 3041
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to prompt payment of insurance claims.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 1(4), Article 21.55, Insurance Code, is
1-5 amended to read as follows:
1-6 (4) "Insurer" means any insurer engaged in the
1-7 business of insurance, as defined by Article 1.14-1 of this code,
1-8 [authorized to do business as an insurance company or to provide
1-9 insurance] in this state, including:
1-10 (A) a domestic or foreign, stock and mutual,
1-11 life, health, or accident insurance company;
1-12 (B) a domestic or foreign, stock or mutual, fire
1-13 and casualty insurance company;
1-14 (C) a Mexican casualty company;
1-15 (D) a domestic or foreign Lloyd's plan insurer;
1-16 (E) a domestic or foreign reciprocal or
1-17 insurance exchange;
1-18 (F) a domestic or foreign fraternal benefit
1-19 society;
1-20 (G) a stipulated premium insurance company;
1-21 (H) a nonprofit legal service corporation;
1-22 (I) a statewide mutual assessment company;
1-23 (J) a local mutual aid association;
1-24 (K) a local mutual burial association;
2-1 (L) an association exempt under Article 14.17 of
2-2 this code;
2-3 (M) a nonprofit hospital, medical, or dental
2-4 service corporation, including a company subject to Chapter 20 of
2-5 this code;
2-6 (N) a county mutual insurance company;
2-7 (O) a farm mutual insurance company;
2-8 (P) a risk retention group;
2-9 (Q) a purchase group;
2-10 (R) a surplus lines carrier; and
2-11 (S) a guaranty association created and operating
2-12 under Article 21.28-C or 21.28-D of this code.
2-13 SECTION 2. Section 2, Article 21.55, Insurance Code, is
2-14 amended to read as follows:
2-15 Sec. 2. NOTICE OF CLAIM; INSURER REQUIREMENTS. (a) Each
2-16 [Except as provided by Subsection (d) of this section, an] insurer
2-17 shall, not later than the 15th day after receipt of notice of a
2-18 claim or the 30th business day if the insurer is an eligible
2-19 surplus lines insurer:
2-20 (1) acknowledge receipt of the claim;
2-21 (2) mail to the claimant a complete copy of the
2-22 applicable insurance policy if required to do so under Subsection
2-23 (b) of this section;
2-24 (3) commence any investigation of the claim; and
2-25 (4) [(3)] request from the claimant all items,
2-26 statements, and forms that the insurer reasonably believes, at that
2-27 time, will be required from the claimant.
3-1 (b) An insurer shall mail a complete copy of the applicable
3-2 insurance policy under Subsection (a) of this section if, in the
3-3 notice of the claim, the claimant notifies the insurer of a loss
3-4 covered by the policy that is the result of a fire, flood, natural
3-5 disaster, or other circumstance in which it is reasonable to assume
3-6 that the claimant's copy of the policy has been lost or destroyed.
3-7 (c) The insurer may make additional [Additional] requests
3-8 for information from the claimant [may be made] if, during the
3-9 investigation of the claim, the insurer determines that the [such]
3-10 additional requests are necessary.
3-11 (d) [(b)] If the acknowledgment of the claim is not made in
3-12 writing, the insurer shall make a record of the date, means, and
3-13 content of the acknowledgment.
3-14 (e) An insurer who receives a nonwritten notice of claim
3-15 may, on or before the third business day after the date the insurer
3-16 receives the notice of claim, advise the claimant that written
3-17 notice is required. An insurer who does not request written notice
3-18 under this subsection is subject to each requirement applicable to
3-19 a written notice of claim, beginning on the date the insurer
3-20 receives the nonwritten notice of claim. An insurer who requests a
3-21 written notice of claim from a claimant under this subsection shall
3-22 respond to that written notice, if received by the insurer, as
3-23 required by this article.
3-24 SECTION 3. Sections 3(a) and (b), Article 21.55, Insurance
3-25 Code, are amended to read as follows:
3-26 (a) Except as provided by Subsections (b) and (d) of this
3-27 section, an insurer shall notify a claimant in writing of the
4-1 acceptance or rejection of the claim not later than the 15th
4-2 business day after the date the insurer receives all items,
4-3 statements, and forms required by the insurer from the claimant, in
4-4 order to secure final proof of loss.
4-5 (b) If the insurer has a reasonable basis to believe that
4-6 the loss results from arson, the insurer shall notify the claimant
4-7 in writing of the acceptance or rejection of the claim not later
4-8 than the 30th day after the date the insurer receives all items,
4-9 statements, and forms required by the insurer from the claimant.
4-10 SECTION 4. Section 6, Article 21.55, Insurance Code, is
4-11 amended to read as follows:
4-12 Sec. 6. DAMAGES. In all cases where a claim is made
4-13 pursuant to a policy of insurance and the insurer liable therefor
4-14 is not in compliance with the requirements of this article, such
4-15 insurer may not deny liability for the claim and is [shall be]
4-16 liable to pay the holder of the policy, or the beneficiary making a
4-17 claim under the policy, in addition to the amount of the claim, 18
4-18 percent per annum of the amount of such claim as damages, together
4-19 with reasonable attorney fees. If suit is filed, such attorney
4-20 fees shall be taxed as part of the costs in the case. The damages
4-21 begin to accrue on the date of violation and end on the date the
4-22 claim is paid in full.
4-23 SECTION 5. This Act takes effect September 1, 1999, and
4-24 applies only to a claim against a policy made on or after the
4-25 effective date of this Act. A claim against a policy made before
4-26 the effective date of this Act is governed by the law applicable to
4-27 the claim immediately before the effective date of this Act, and
5-1 that law is continued in effect for that purpose.
5-2 SECTION 6. The importance of this legislation and the
5-3 crowded condition of the calendars in both houses create an
5-4 emergency and an imperative public necessity that the
5-5 constitutional rule requiring bills to be read on three several
5-6 days in each house be suspended, and this rule is hereby suspended.