1-1 By: Smithee (Senate Sponsor - Sibley) H.B. No. 3041
1-2 (In the Senate - Received from the House May 5, 1999;
1-3 May 6, 1999, read first time and referred to Committee on Economic
1-4 Development; May 14, 1999, reported adversely, with favorable
1-5 Committee Substitute by the following vote: Yeas 4, Nays 0;
1-6 May 14, 1999, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 3041 By: Sibley
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to prompt payment of insurance claims.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Section 1(4), Article 21.55, Insurance Code, is
1-13 amended to read as follows:
1-14 (4) "Insurer" means any insurer engaged in the
1-15 business of insurance, as defined by Article 1.14-1 of this code,
1-16 [authorized to do business as an insurance company or to provide
1-17 insurance] in this state, including:
1-18 (A) a domestic or foreign, stock and mutual,
1-19 life, health, or accident insurance company;
1-20 (B) a domestic or foreign, stock or mutual, fire
1-21 and casualty insurance company;
1-22 (C) a Mexican casualty company;
1-23 (D) a domestic or foreign Lloyd's plan insurer;
1-24 (E) a domestic or foreign reciprocal or
1-25 insurance exchange;
1-26 (F) a domestic or foreign fraternal benefit
1-27 society;
1-28 (G) a stipulated premium insurance company;
1-29 (H) a nonprofit legal service corporation;
1-30 (I) a statewide mutual assessment company;
1-31 (J) a local mutual aid association;
1-32 (K) a local mutual burial association;
1-33 (L) an association exempt under Article 14.17 of
1-34 this code;
1-35 (M) a nonprofit hospital, medical, or dental
1-36 service corporation, including a company subject to Chapter 20 of
1-37 this code;
1-38 (N) a county mutual insurance company;
1-39 (O) a farm mutual insurance company;
1-40 (P) a risk retention group;
1-41 (Q) a purchase group;
1-42 (R) a surplus lines carrier; and
1-43 (S) a guaranty association created and operating
1-44 under Article 21.28-C or 21.28-D of this code.
1-45 SECTION 2. Section 2, Article 21.55, Insurance Code, is
1-46 amended to read as follows:
1-47 Sec. 2. NOTICE OF CLAIM; INSURER REQUIREMENTS. (a) Each
1-48 [Except as provided by Subsection (d) of this section, an] insurer
1-49 shall, not later than the 15th day after receipt of notice of a
1-50 claim or the 30th business day if the insurer is an eligible
1-51 surplus lines insurer:
1-52 (1) acknowledge receipt of the claim;
1-53 (2) mail to the claimant a complete copy of the
1-54 applicable insurance policy if required to do so under Subsection
1-55 (b) of this section;
1-56 (3) commence any investigation of the claim; and
1-57 (4) [(3)] request from the claimant or a third party
1-58 all items, statements, and forms that the insurer reasonably
1-59 believes, at that time, will be required from the claimant or a
1-60 third party.
1-61 (b) An insurer shall mail a complete copy of the applicable
1-62 insurance policy under Subsection (a) of this section if, in the
1-63 notice of the claim, the claimant requests a copy and notifies the
1-64 insurer of a loss covered by the policy that is the result of a
2-1 fire, flood, natural disaster, or other circumstance in which it is
2-2 reasonable to assume that the claimant's copy of the policy has
2-3 been lost or destroyed.
2-4 (c) The insurer may make additional [Additional] requests
2-5 for information from the claimant or a third party [may be made]
2-6 if, during the investigation of the claim, the insurer determines
2-7 that the [such] additional requests are reasonable and necessary.
2-8 (d) [(b)] If the acknowledgement of the claim is not made in
2-9 writing, the insurer shall make a record of the date, means, and
2-10 content of the acknowledgement.
2-11 (e) An insurer who receives a nonwritten notice of claim
2-12 may, on or before the third business day after the date the insurer
2-13 receives the notice of claim, advise the claimant that written
2-14 notice is required. An insurer who does not request written notice
2-15 under this subsection is subject to each requirement applicable to
2-16 a written notice of claim, beginning on the date the insurer
2-17 receives the nonwritten notice of claim. An insurer who requests a
2-18 written notice of claim from a claimant under this subsection shall
2-19 respond to that written notice, if received by the insurer, as
2-20 required by this article.
2-21 SECTION 3. Sections 3(a) and (b), Article 21.55, Insurance
2-22 Code, are amended to read as follows:
2-23 (a) Except as provided by Subsections (b) and (d) of this
2-24 section, an insurer shall notify a claimant in writing of the
2-25 acceptance or rejection of the claim not later than the 15th
2-26 business day after the date the insurer receives all items,
2-27 statements, and forms reasonably required by the insurer from the
2-28 claimant or a third party, in order to secure final proof of loss.
2-29 (b) If the insurer has a reasonable basis to believe that
2-30 the loss results from arson, the insurer shall notify the claimant
2-31 in writing of the acceptance or rejection of the claim not later
2-32 than the 30th day after the date the insurer receives all items,
2-33 statements, and forms required by the insurer from the claimant or
2-34 a third party.
2-35 SECTION 4. Section 6, Article 21.55, Insurance Code, is
2-36 amended to read as follows:
2-37 Sec. 6. Damages. In all cases where a claim is made
2-38 pursuant to a policy of insurance and the insurer liable therefor
2-39 is not in compliance with the requirements of this article, such
2-40 insurer may not deny liability for the claim and is [shall be]
2-41 liable to pay the holder of the policy, or the beneficiary making a
2-42 claim under the policy, in addition to the amount of the claim, 18
2-43 percent per annum of the amount of such claim as damages, together
2-44 with reasonable attorney fees. If suit is filed, such attorney
2-45 fees shall be taxed as part of the costs in the case. The damages
2-46 begin to accrue on the date of violation and end on the date the
2-47 claim is paid in full.
2-48 SECTION 5. This Act takes effect September 1, 1999, and
2-49 applies only to a claim against a policy made on or after the
2-50 effective date of this Act. A claim against a policy made before
2-51 the effective date of this Act is governed by the law applicable to
2-52 the claim immediately before the effective date of this Act, and
2-53 that law is continued in effect for that purpose.
2-54 SECTION 6. The importance of this legislation and the
2-55 crowded condition of the calendars in both houses create an
2-56 emergency and an imperative public necessity that the
2-57 constitutional rule requiring bills to be read on three several
2-58 days in each house be suspended, and this rule is hereby suspended.
2-59 * * * * *