76R11416 DB-F                           
         By Smithee                                            H.B. No. 3041
         Substitute the following for H.B. No. 3041:
         By Moreno of Harris                               C.S.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 by amending Subsection (a) and adding Subsection (c) to
2-15     read as follows:
2-16           (a)  Except as provided by Subsection (c) [(d)] of this
2-17     section, an insurer shall, not later than the 15th day after
2-18     receipt of notice of a claim or the 30th business day if the
2-19     insurer is an eligible surplus lines insurer:
2-20                 (1)  acknowledge receipt of the claim;
2-21                 (2)  commence any investigation of the claim; and
2-22                 (3)  request from the claimant all items, statements,
2-23     and forms that the insurer reasonably believes, at that time, will
2-24     be required from the claimant.  Additional requests may be made if
2-25     during the investigation of the claim such additional requests are
2-26     necessary.
2-27           (c)  An insurer who receives a nonwritten notice of claim
 3-1     may, on or before the third business day after the date the insurer
 3-2     receives the notice of claim, advise the claimant that written
 3-3     notice is  required.  An insurer who does not request written
 3-4     notice under this subsection is subject to each requirement
 3-5     applicable to a written notice of claim, beginning on the date the
 3-6     insurer receives the nonwritten notice of claim.  An insurer who
 3-7     requests a written notice of claim from a claimant under this
 3-8     subsection shall respond to that written notice, if received by the
 3-9     insurer, as required by this article.
3-10           SECTION 3.  Sections 3(a) and (b), Article 21.55, Insurance
3-11     Code, are amended to read as follows:
3-12           (a)  Except as provided by Subsections (b) and (d) of this
3-13     section, an insurer shall notify a claimant in writing of the
3-14     acceptance or rejection of the claim not later than the 15th
3-15     business day after the date the insurer receives all items,
3-16     statements, and forms required by the insurer from the claimant, in
3-17     order to secure final proof of loss.
3-18           (b)  If the insurer has a reasonable basis to believe that
3-19     the loss results from arson, the insurer shall notify the claimant
3-20     in writing of the acceptance or rejection of the claim not later
3-21     than the 30th day after the date the insurer receives all items,
3-22     statements, and forms required by the insurer from the claimant.
3-23           SECTION 4.  Section 6, Article 21.55, Insurance Code, is
3-24     amended to read as follows:
3-25           Sec. 6.  DAMAGES.  In all cases where a claim is made
3-26     pursuant to a policy of insurance and the insurer liable therefor
3-27     is not in compliance with the requirements of this article, such
 4-1     insurer may not deny liability for the claim and is [shall be]
 4-2     liable to pay the holder of the policy, or the beneficiary making a
 4-3     claim under the policy, in addition to the amount of the claim, 18
 4-4     percent per annum of the amount of such claim as damages, together
 4-5     with reasonable attorney fees.  If suit is filed, such attorney
 4-6     fees shall be taxed as part of the costs in the case.  The damages
 4-7     begin to accrue on the date of violation and end on the date the
 4-8     claim is paid in full.
 4-9           SECTION 5.  This Act takes effect September 1, 1999, and
4-10     applies only to a claim against a policy made on or after the
4-11     effective date of this Act.  A claim against a policy made before
4-12     the effective date of this Act is governed by the law applicable to
4-13     the claim immediately before the effective date of this Act, and
4-14     that law is continued in effect for that purpose.
4-15           SECTION 6.  The importance of this legislation and the
4-16     crowded condition of the calendars in both houses create an
4-17     emergency and an imperative public necessity that the
4-18     constitutional rule requiring bills to be read on three several
4-19     days in each house be suspended, and this rule is hereby suspended.