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78R4819 KCR-D
By: Davis of Dallas H.B. No. 881
A BILL TO BE ENTITLED
AN ACT
relating to a prompt acceptance or denial of a claim for benefits
under a disability insurance policy.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Article 21.55, Insurance Code, is amended by
adding Section 9 to read as follows:
Sec. 9. DETERMINATION OF ELIGIBILITY TO RECEIVE BENEFITS
UNDER DISABILITY INSURANCE POLICY. This article does not apply to a
determination of a claimant's eligibility to receive disability
insurance benefit payments under the terms of a disability
insurance policy.
SECTION 2. Subchapter E, Chapter 21, Insurance Code, is
amended by adding Article 21.55A to read as follows:
Art. 21.55A. PROMPT ACCEPTANCE OR DENIAL OF CLAIM FOR
BENEFITS MADE UNDER DISABILITY INSURANCE POLICY
Sec. 1. DEFINITIONS. In this article:
(1) "Claim for benefits" means a claim made by a
policyholder that the policyholder is eligible to receive
disability insurance benefit payments under the terms of a
disability insurance policy.
(2) "Claimant" means a person making a claim for
benefits.
(3) "Insurer" means any insurer authorized to issue
disability insurance policies or to engage in the business of
disability insurance in this state, including:
(A) an insurance company authorized to engage in
the business of life, health, or accident insurance in this state;
(B) a domestic or foreign fraternal benefit
society;
(C) a mutual life insurance company;
(D) a local mutual aid association;
(E) a statewide mutual assessment company,
mutual assessment company, or mutual assessment life, health, and
accident association;
(F) a mutual insurance company writing policies
other than life insurance;
(G) a Lloyd's plan;
(H) a reciprocal or interinsurance exchange; and
(I) a stipulated premium insurance company.
(4) "Notice of claim for benefits" means any
notification in writing to an insurer that reasonably apprises the
insurer of the facts relating to or the existence of a claim for
benefits.
Sec. 2. NOTICE OF CLAIM FOR BENEFITS. (a) An insurer
shall, not later than the 10th calendar day after receipt of a
notice of claim for benefits:
(1) acknowledge receipt of the claim for benefits;
(2) commence a determination of the claimant's
eligibility to receive disability insurance benefit payments under
the terms of the disability insurance policy; and
(3) request from the claimant all items, statements,
and forms that the insurer reasonably believes will be required
from the claimant to make a determination of the claimant's
eligibility to receive disability insurance benefit payments under
the terms of the disability insurance policy.
(b) If the acknowledgment of a claim for benefits is not
made in writing, an insurer shall make a record of the date, means,
and content of the acknowledgment.
Sec. 3. ACCEPTANCE OR DENIAL OF CLAIM FOR BENEFITS. (a)
Except as provided by Subsection (b) of this section, an insurer
shall notify a claimant in writing of the insurer's acceptance or
denial of a claim for benefits not later than the 30th calendar day
after the date the insurer receives from the claimant all items,
statements, and forms requested by the insurer to make a
determination of the claimant's eligibility.
(b) An insurer shall notify a claimant not later than the
date specified under Subsection (a) of this section if the insurer
is unable to accept or deny a claim for benefits within the period
specified under Subsection (a).
(c) Not later than the 15th calendar day after the date an
insurer notifies a claimant under Subsection (b) of this section,
the insurer shall:
(1) accept or deny a claim for benefits; and
(2) notify a claimant in writing of the insurer's
acceptance or denial of the claim for benefits.
(d) If an insurer denies a claimant's claim for benefits,
the notice required by Subsection (a) or (c) of this section must
state the reason for the denial of the claim for benefits in clear
and unambiguous language.
(e) To contest an insurer's denial of a claim for benefits,
the claimant must send a written response to the insurer not later
than the 30th calendar day after the date the claimant receives the
notice sent by the insurer under Subsection (a) or (c) of this
section.
Sec. 4. PAYMENT OF CLAIM FOR BENEFITS. An insurer shall
make the first benefit payment not later than the fifth business day
after the notice of acceptance of a claim for benefits sent under
Section 3 of this article is mailed to a claimant.
Sec. 5. REMEDIES. A violation of this article is an unfair
method of competition or deceptive act or practice in the business
of insurance for purposes of Article 21.21 of this code and an
unfair settlement practice for purposes of Article 21.21-2 of this
code.
SECTION 3. This Act takes effect September 1, 2003, and
applies only to a claim for benefits under a disability insurance
policy made on or after January 1, 2004. A claim for benefits under
a disability insurance policy made before January 1, 2004, is
governed by the law in effect immediately before the effective date
of this Act, and the former law is continued in effect for that
purpose.