By:  Carona                                           S.B. No. 1531
         Line and page numbers may not match official copy.
         Bill not drafted by TLC or Senate E&E.
                                A BILL TO BE ENTITLED
                                       AN ACT
 1-1     relating to unfair settlement practice in the business of
 1-2     insurance.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Section 10, Article 21.21, Insurance Code is
 1-5     amended to read as follows:
 1-6           (10)  Unfair Settlement Practices. (a) engaging in any of the
 1-7     following unfair settlement practices with respect to a claim by an
 1-8     insured, [or] beneficiary, health care provider, or person or
 1-9     entity with which one has contracted to provide services to an
1-10     insured or beneficiary, as appropriate.
1-11           (i) misrepresenting to a claimant a material fact or policy
1-12     provision relating to coverage at issue;
1-13           (ii) failing to attempt in good faith to effectuate a prompt,
1-14     fair, and equitable settlement of a claim with respect to which the
1-15     insurer's liability has become reasonable clear;
1-16           (iii) failing to attempt, in good faith, to effectuate a
1-17     prompt, fair, and equitable settlement under one portion of a
1-18     policy of a claim with respect to which the insurer's liability has
1-19     become reasonably clear in order to influence the claimant to
1-20     settle an additional claim under another portion of the coverage,
1-21     provided that this prohibition does not apply if payment under one
1-22     portion of the coverage, provided that this prohibition does not
 2-1     apply if payment under one portion of the coverage constitutes
 2-2     evidence of liability under another portion of the policy;
 2-3           (iv) failing to provide promptly to a policyholder a
 2-4     reasonable explanation of the basis in the policy, in relation to
 2-5     the facts or applicable law, for the insurer's denial of a claim or
 2-6     for the offer of a compromise settlement of a claim;
 2-7           (v) failing within a reasonable time to:
 2-8                 (A)  affirm or deny coverage of a claim to a policy
 2-9     holder; or
2-10                 (B)  submit a reservation of rights to a policyholder;
2-11           (vi) refusing, failing or unreasonably delaying an offer of
2-12     settlement under applicable first-party coverage on the basis that
2-13     other coverage may be available or that third parties are
2-14     responsible for the damages suffered, except as may be specifically
2-15     provided in the policy;
2-16           (vii) undertaking to enforce a full and final release of a
2-17     claim from a policyholder when only a particle payment has been
2-18     made, provided that this prohibition does not apply to a compromise
2-19     settlement of a doubtful or disputed claim;
2-20           (viii) refusing to pay a claim without conducting a
2-21     reasonable investigation with respect to the claim;
2-22           (ix) With respect to a Texas personal auto policy, delaying
2-23     or refusing settlement of a claim solely because there is other
2-24     insurance of a different type available to satisfy all or any part
2-25     of the loss forming the basis of that claim; or
2-26           (x) requiring a claimant, as a condition of settling a claim,
 3-1     to produce the claimant's federal income tax returns for
 3-2     examination or investigation by the person unless:
 3-3     A (A) the claimant is ordered to produce those tax returns by a
 3-4     court;
 3-5     B (B) the claim involves a fire loss; or
 3-6           (C) the claim involves lost profits or income.
 3-7           (b) Paragraph (a) of this clause does not provide a cause of
 3-8     action to a third party asserting one or more claims against an
 3-9     insured covered under a liability insurance policy.
3-10     (11) Misrepresentation of Insurance Policy. Misrepresenting an
3-11     insurance policy by:
3-12                 (a) making an untrue statement of material fact;
3-13                 (b) failing to state a material fact that is necessary
3-14     to make other statements made not misleading considering the
3-15     circumstances under which the statements were made;
3-16                 (c) making a statement in such manner as to mislead a
3-17     reasonable prudent person to a false conclusion of a material fact;
3-18                 (d) making a material misstatement of law; or
3-19                 (e) failing to disclose any matter required by law to
3-20     be disclosed, including a failure to make disclosure in accordance
3-21     with another provision of this code.
3-22           SECTION 2.  This Act takes effect on September 1, 1999.
3-23           SECTION 3.  The importance of the legislation and the crowded
3-24     condition of the calendars in both houses create an emergency and
3-25     an imperative public necessity that the constitutional rule
3-26     requiring bills to be read on three several days in each house be
 4-1     suspended, and this rule is hereby suspended.