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.
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