By Averitt H.B. No. 3475 Line and page numbers may not match official copy. Bill not drafted by TLC or Senate E&E. A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the prompt payment of claims to first party claimants 1-3 under Article 21.55, Insurance Code. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Section 2, Article 21.55, Insurance Code, is 1-6 amended to read as follows: 1-7 (a) Except as provided by Subsection (d) of this section, 1-8 (A)n insurer shall, not later than the 15th business day after 1-9 receipt of notice of a claim or the 30th business day if the 1-10 insurer is an eligible surplus lines insurer: 1-11 (1) acknowledge receipt of the claim: 1-12 (2) commence any investigation of the claim: and 1-13 (3) request from the claimant and/or any third party 1-14 all items, statements, and forms and other information that the 1-15 insurer reasonably believes, at that time, will be required from 1-16 the claimant to decide whether to accept of reject the claim. 1-17 Additional reasonable requests may be made during the investigation 1-18 of the claim provided the insurer notifies the claimant of the need 1-19 for the additional information and provides an estimate of the time 1-20 within which the information is expected to be received. 1-21 (b) If the acknowledgement of the claim is not made in 2-1 writing, the insurer shall make a record of the date, means and 2-2 content of the acknowledgement. 2-3 SECTION 2. Section 3, Article 21.55, Insurance Code, is 2-4 amended to read as follows: 2-5 (a) Except as provided by Subsections (b) and (d) of this 2-6 section, an insurer shall notify a claimant in writing of the 2-7 acceptance or rejection of the claim not later than the 15th 2-8 business day after the date the insurer receives all items, 2-9 statements, and forms information required and requested by the 2-10 insurer under Section (2)(a) in order to secure final proof of 2-11 loss. 2-12 (b) If the insurer has a reasonable basis to believe that 2-13 the loss results from arson or insurance fraud, the insurer shall 2-14 notify the claimant in writing of the acceptance or rejection of 2-15 the claim not later than the 30th business day after the date the 2-16 insurer receives all items, statements, and forms required and 2-17 requested by the insurer under Section (2)(a). 2-18 (c) If the insurer rejects the claim, the notice required by 2-19 Subsections (a) and (b) of this section must state the reasons for 2-20 the rejection. 2-21 (d) If the insurer is unable to accept or reject the claim 2-22 within the period specified by Subsection (a) or (b) of this 2-23 section, the insurer shall notify the claimant, not later than the 2-24 date specified under Subsection (a) or (b), as applicable, that 2-25 additional time is needed to accept or reject the claim. The 3-1 notice provided under this subsection must give the reasons the 3-2 insurer needs additional time. 3-3 (e) Not later than the 45th business day after the date an 3-4 insurer notifies a claimant under Subsection (d) of this section, 3-5 the insurer shall accept or reject the claim. 3-6 (f) Except as otherwise provided, if an insurer delays 3-7 payment of a fails to accept or reject a claim following its 3-8 receipt of all items, statements, and forms reasonably requested 3-9 and required, as provided under Section 2(a) of this article, for a 3-10 period exceeding the period specified in other applicable statutes 3-11 or, in the absence of any other specified period, for more than 60 3-12 days, within the time specified in this section, the insurer shall 3-13 be liable to pay damages and other items as provided for in Section 3-14 6 of this article. 3-15 (g) If it is determined as a result of arbitration or 3-16 litigation that a claim or any part of a claim received by an 3-17 insurer is invalid and therefore should not be paid by the insurer, 3-18 the requirements of Subsection (f) of this section shall not apply 3-19 in such case to those parts of the claim for which the insurer is 3-20 not liable. 3-21 SECTION 3. Section 4, Article 21.55, Insurance Code, is 3-22 amended to read as follows: 3-23 If an insurer notifies a claimant that the insurer will pay a claim 3-24 or part of a claim accepts a claim under Section 3 of this article, 3-25 the insurer shall pay the claim not later than the fifth business 4-1 day after the notice has been made. If payment of the claim or 4-2 part of the claim is conditioned on the performance of an act by 4-3 the claimant, the insurer shall pay the claim not later than the 4-4 fifth business day after the date the act is performed within 5 4-5 business days following notification by the insured that such 4-6 amount will be accepted in resolution of the claim in question. 4-7 Surplus lines insurers shall pay the claim not later than the 4-8 twentieth within 20 business days after the notice or date the act 4-9 is performed following notification by the insured that such amount 4-10 will be accepted in resolution of the claim in question. 4-11 SECTION 4. Section 5, Article 21.55, Insurance Code, is 4-12 amended to read as follows: 4-13 (d) In the event of a weather-related catastrophe or major 4-14 natural disaster, as defined by the State Board Texas Department of 4-15 Insurance, the claim-handling deadlines imposed under this article 4-16 are extended for an additional 15 business days. 4-17 SECTION 5. Section 6, Article 21.55, Insurance Code, is 4-18 amended to read as follows: 4-19 In all cases where a claim is made pursuant to a policy of 4-20 insurance an insurer's liability for payment of a claim is 4-21 reasonably clear at the time the insurer is required to accept or 4-22 deny the claim pursuant to the terms of this article, and the 4-23 insurer liable therefore is not in compliance with the requirements 4-24 of this article, such insurer shall be liable to pay the holder of 4-25 the policy, or the beneficiary making a claim under the policy 5-1 claimant, in addition to the amount of the delayed or unpaid claim, 5-2 18 percent per annum of the amount of such claim as damages, 5-3 together with reasonable attorney fees for the recovery of the 5-4 damages set forth in this article. If suit is filed, such attorney 5-5 fees shall be taxed as part of the costs in the case. The 5-6 calculation of damages shall begin on the date following the 5-7 expiration of the applicable time deadline. 5-8 SECTION 6. This Act takes effect September 1, 1999. 5-9 SECTION 7. The importance of this legislation and the 5-10 crowded condition of the calendars in both houses create an 5-11 emergency and an imperative public necessity that the 5-12 constitutional rule requiring bills to be read on three several 5-13 days in each house be suspended, and this rule is hereby suspended.