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.