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.