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.