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.