HBA-NRS H.B. 1943 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1943 By: Smithee Insurance 3/6/2001 Introduced BACKGROUND AND PURPOSE Current law provides a process for policyholders to collect on claims against motor vehicle insurers. However, the procedures for an insurer to follow when dealing with a third party's claim brought against a policyholder are not specified. Insurers are not required to respond to a third-party claim within a specified time period, which may cause unnecessary delays in the payment of claims. House Bill 1943 protects the interests of third-party claimants in motor vehicle accidents by requiring the at-fault driver's insurer to provide, in writing, the reasons for a denied claim, establishing a claimant's statement of rights during the claims process, and providing a remedy to third-party claimants if insurance companies fail to respond to or pay legitimate claims in a timely manner. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the commissioner of insurance in SECTION 1 (Section 5, Article 21.56A, Insurance Code) of this bill. ANALYSIS House Bill 1943 amends the Insurance Code to require an insurer notified of a property damage claim against a policyholder of the insurer by a third-party claimant to respond in writing to the claimant not later than 15 days after notification of the claim. The bill provides that the insurer must respond to the claimant in writing and must state whether the insurer agrees to pay the claim or why the insurer will not agree to pay the claim and, if the insurer agrees to pay part of the claim, the percentage share of the claim that the insurer agrees to pay. The bill requires an insurer refusing to pay all or a percentage of a claim to state writing the factual bases under which it denies the payment for the claim. On notification in writing to a claimant of the specific reason for a delayed response to the claimant, the bill authorizes an insurer to extend the 15-day notification period for an additional period not to exceed 30 days. The bill sets forth provisions relating to the appraisal of the property damage. On receipt of notification of a claim by a claimant, the bill requires the insurer to send the claimant a written statement of the claimant's rights relating to third-party claims procedures under motor vehicle insurance coverage not later than the seventh business day after the date on which the insurer is notified by the claimant. The bill requires the commissioner of insurance by rule to specify the form of the statement of rights. The bill provides that an insurer that commits a violation relating to third-party claims procedures under motor vehicle insurance coverage is subject to administrative penalties imposed by the commissioner of insurance. The bill authorizes a claimant to bring an action for a violation relating to third-party claims procedures under motor vehicle insurance coverage if the insurer commits certain acts. A claimant who prevails in a cause of action brought against an insurer is entitled to recover the amount necessary to repair the property damage to the motor vehicle without regard to whether the insurer would otherwise be obligated to pay the claim and reasonable attorney's fees. The bill does not create or affect fiduciary relationships or duties in effect on September 1, 2001. EFFECTIVE DATE September 1, 2001, and applies only to a claim brought under a motor vehicle insurance policy that is delivered, issued for delivery, or renewed on or after January 1, 2002.