83R8138 PMO-D

By: Eiland H.B. No. 1898

A BILL TO BE ENTITLED

AN ACT

relating to requiring certain residential property insurers to adjust certain claims under Texas Windstorm Insurance Association policies; imposing fees.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 2210, Insurance Code, is amended by adding Subchapter L-2 to read as follows:

SUBCHAPTER L-2. ADJUSTMENT OF CLAIMS BY CERTAIN INSURERS

Sec. 2210.591. DEFINITIONS. In this subchapter:

(1) "Association policy," "claim," and "claimant" have the meanings assigned by Section 2210.571.

(2) "Residential property insurance" means insurance coverage against loss to real or tangible personal property at a fixed location that is provided through a homeowners insurance policy, including a tenants insurance policy, a condominium owners insurance policy, or a residential fire and allied lines insurance policy.

Sec. 2210.592. APPLICABILITY. This subchapter applies to an insurer that delivers, issues for delivery, or renews a residential property insurance policy that provides coverage for a risk located in the seacoast territory.

Sec. 2210.593. CLAIMS ADJUSTMENT REQUIRED. (a) An insurer acting under this subchapter shall adjust a claim or loss under an association policy that occurs on a property covered under a residential property insurance policy issued by the insurer.

(b) For purposes of adjusting a claim under this subchapter, the insurer is an agent or representative of the association as described by Section 2210.572(a).

(c) The insurer is not responsible for payment of the adjusted claim. The insurer shall submit the claim to the association for payment to the insured under Section 2210.5731.

(d) The association shall pay to the insurer for the adjustment of the claim three percent of the amount of the adjusted claim, subject to completion of the audit required under Section 2210.597.

Sec. 2210.594. EXCLUSIVE REMEDIES AND LIMITATION ON AWARD. (a) Section 2210.572 applies to, and Subchapter L-1 provides the exclusive remedies for, a claim against the insurer or the association with respect to:

(1) a claim adjusted under Section 2210.593; or

(2) to the extent provided by a policy provision described by Subsection (b), a loss under a residential property insurance policy that arises from the same occurrence as the adjusted claim.

(b) An insurer that writes a residential property insurance policy in the seacoast territory may include in the policy a provision that, with respect to a loss described by Subsection (a)(2), establishes substantially the same procedures and limitations of rights with respect to the loss that are applicable to a claim under an association policy under Subchapter L-1. The commissioner by rule may adopt form policy language to implement this subsection.

Sec. 2210.595. FILING OF CLAIM WITH INSURER; CLAIM PROCESSING. (a) Subject to Section 2210.205(b), an insured must file a claim under an association policy with an insurer that issued a residential property insurance policy for the same property covered by the association policy, if any, not later than the first anniversary of the date on which the damage to property that is the basis of the claim occurs.

(b) The claimant may submit written materials, comments, documents, records, and other information to the insurer relating to the claim. If the claimant fails to submit information in the claimant's possession that is necessary for the insurer to determine whether to accept or reject a claim, the insurer may, not later than the 30th day after the date the claim is filed, request in writing the necessary information from the claimant.

(c) The insurer shall, on request, provide a claimant reasonable access to all information relevant to the claim. The claimant may copy the information at the claimant's own cost or may request the insurer to provide a copy of all or part of the information to the claimant. The insurer may charge a claimant the actual cost incurred by the insurer in providing a copy of information under this section, excluding any amount for labor involved in making any information or copy of information available to a claimant.

Sec. 2210.596. NOTICE OF DETERMINATION. (a) Unless the applicable 60-day period described by this subsection is extended by the commissioner in the manner described by Section 2210.581, not later than the later of the 60th day after the date the insurer receives a claim or the 60th day after the date the insurer receives information requested under Section 2210.595(b), the insurer shall provide written notification of the insurer's determination of the claim under the association policy to the claimant and the association.

(b) If the insurer on behalf of the association accepts coverage for the claim in full, the notice described by Subsection (a) must state the amount of loss that the association will pay and the time limit to demand appraisal under Section 2210.574.

(c) If the insurer on behalf of the association accepts coverage for the claim in part or has denied coverage for the claim in part or in full, the notice described by Subsection (a) must inform the claimant of, as applicable:

(1) the portion of the loss for which the insurer, on behalf of the association, accepted coverage and the amount of loss the association will pay;

(2) the portion of the loss for which the insurer, on behalf of the association, denies coverage and a detailed summary of the manner in which the insurer determined not to accept coverage for that portion of the loss; and

(3) the time limit to:

(A) demand appraisal under Section 2210.574 of the portion of the loss for which coverage is accepted; and

(B) provide notice of intent to bring an action as required by Section 2210.575.

(d) In addition to the notice required under Subsection (c)(1) or (2), the insurer shall provide to the claimant a form on which the claimant may provide the association notice of intent to bring an action as required by Section 2210.575.

Sec. 2210.597. INDEPENDENT AUDIT OF INSURER; FEES. The commissioner by rule shall:

(1) require the audit by an independent auditor of an insurer's adjustment of claims under this subchapter; and

(2) set and impose fees for the audit to be paid by the insurer audited.

SECTION 2. Sections 2210.572(a) and (c), Insurance Code, are amended to read as follows:

(a) This subchapter provides the exclusive remedies for a claim against the association, including an agent or representative of the association and an insurer acting under Subchapter L-2.

(c) The association, and an agent or representative of the association, including an insurer acting under Subchapter L-2, may not be held liable for damages under Chapter 17, Business & Commerce Code, or, except as otherwise specifically provided by this chapter, under any provision of any law providing for additional damages, punitive damages, or a penalty.

SECTION 3. Section 2210.573(a), Insurance Code, is amended to read as follows:

(a) Subject to Section 2210.205(b) and except as provided by Section 2210.595, an insured must file with the association a claim under an association policy not later than the first anniversary of the date on which the damage to property that is the basis of the claim occurs.

SECTION 4. Section 2210.5731, Insurance Code, is amended by adding Subsection (a-1) to read as follows:

(a-1) Except as provided by Subsection (b), if an insurer notifies a claimant under Section 2210.596 that the insurer, on behalf of the association, has accepted coverage for a claim in full or accepted coverage for a claim in part, the association shall pay the accepted claim or accepted portion of the claim not later than the 10th day after the date the association receives the notice.

SECTION 5. Sections 2210.574(b) and (h), Insurance Code, are amended to read as follows:

(b) If a claimant disputes the amount of loss the association will pay for a claim or a portion of a claim, the claimant, not later than the 60th day after the date the claimant receives the notice described by Section 2210.573(d)(1) or (2) or Section 2210.596, may demand appraisal in accordance with the terms of the association policy.

(h) Except as provided by Subsection (g), a claimant may not bring an action against the association with reference to a claim for which the association, or an insurer acting on behalf of the association under Subchapter L-2, has accepted coverage in full.

SECTION 6. Section 2210.575(a), Insurance Code, is amended to read as follows:

(a) If the association or an insurer acting under Subchapter L-2 denies coverage for a claim in part or in full and the claimant disputes that determination, the claimant, not later than the expiration of the limitations period described by Section 2210.577(a), but after the date the claimant receives the notice described by Section 2210.573(d)(2) or (3) or Section 2210.596, must provide the association with notice that the claimant intends to bring an action against the association concerning the partial or full denial of the claim.

SECTION 7. Sections 2210.576(a) and (d), Insurance Code, are amended to read as follows:

(a) The only issues a claimant may raise in an action brought against the association under Section 2210.575 are:

(1) whether the [association's] denial of coverage by the association or the insurer acting under Subchapter L-2 was proper; and

(2) the amount of the damages described by Subsection (b) to which the claimant is entitled, if any.

(d) A claimant that brings an action against the association under Section 2210.575 may, in addition to the covered loss described by Subsection (b)(1) and any consequential damages recovered by the claimant under common law, recover damages in an amount not to exceed the aggregated amount of the covered loss described by Subsection (b)(1) and the consequential damages recovered under common law if the claimant proves by clear and convincing evidence that the association or the insurer acting under Subchapter L-2 mishandled the claimant's claim to the claimant's detriment by intentionally:

(1) failing to meet the deadlines or timelines established under this subchapter without good cause, including the applicable deadline established under Section 2210.5731 for payment of an accepted claim or the accepted portion of a claim;

(2) disregarding applicable guidelines published by the commissioner under Section 2210.578(f);

(3) failing to provide the notice required under Section 2210.573(d) or 2210.596;

(4) rejecting a claim without conducting a reasonable investigation with respect to the claim; or

(5) denying coverage for a claim in part or in full if the association's liability has become reasonably clear as a result of the association's or insurer's investigation with respect to the portion of the claim that was denied.

SECTION 8. Sections 2210.578(a) and (f), Insurance Code, are amended to read as follows:

(a) The commissioner shall appoint a panel of experts to advise the association or an insurer acting under Subchapter L-2 concerning the extent to which a loss to insurable property was incurred as a result of wind, waves, tidal surges, or rising waters not caused by waves or surges. The panel shall consist of a number of experts to be decided by the commissioner. The commissioner shall appoint one member of the panel to serve as the presiding officer of the panel.

(f) After consideration of the recommendations made by the panel under Subsection (e), the commissioner shall publish guidelines that:

(1) the association will use to settle claims; and

(2) an insurer will use to adjust claims under Subchapter L-2.

SECTION 9. Section 2210.580(a), Insurance Code, is amended to read as follows:

(a) The commissioner shall adopt rules regarding the provisions of this subchapter, including rules concerning:

(1) qualifications and selection of appraisers for the appraisal procedure, mediators for the mediation process, and members of the expert panel;

(2) procedures and deadlines for:

(A) the payment and handling of claims by the association;

(B) the adjusting of claims under Subchapter L-2; and

(C) [as well as] the procedures and deadlines for a review of a claim by the association;

(3) notice of expert panel meetings and the transparency of deliberations of the panel; and

(4) any other matters regarding the handling of claims that are not inconsistent with this subchapter or Subchapter L-2.

SECTION 10. This Act applies only to an insurer that writes a residential property insurance policy that is delivered, issued for delivery, or renewed on or after January 1, 2014.

SECTION 11. This Act takes effect September 1, 2013.