HBA-ALS H.B. 3041 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3041
By: Smithee
Insurance
3/21/1999
Introduced



BACKGROUND AND PURPOSE 

The purpose of this bill is to clarify the requirements of an insurer in
responding to a claimant. 
H.B. 3041 changes the time period in which an eligible surplus lines
insurer is required to acknowledge the receipt of a claim, commence
investigation of a claim, and request specified information from the
claimant.  Under this bill, if an insurer receives unwritten notice of a
claim the insurer is allowed to notify the claimant that written notice is
required, as long as the notice is given within three business days of
receipt of the unwritten notice. This bill removes the provision requiring
surplus lines insurers to pay a claim no later than the 20th business day
after notice, or the day that a specified act is performed.  This bill
removes exemptions currently granted to certain types of insurance and
bonds under this article.  In addition, this bill provides damages and
penalties for an insurer's noncompliance with this article. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Article 21.55, Chapter 21, Subchapter E, Insurance Code,
as follows: 

Sec. 1. Definitions.  Redefines "insurer" and defines "notice."

Sec. 2.  Notice of claim.  Deletes the provision authorizing an eligible
surplus lines insurer to perform specified acts that are required of an
insurer upon receipt of a notice of claim no later than the 30th business
day after receiving the notice of claim.  Authorizes the insurer, if the
insurer receives unwritten notice of a claim, to advise the claimant within
three (3) business days that written notice is required.  Provides that if
the insurer does not request written notice of the claim, the insurer's
time limits for acknowledging the claim, commencing its investigation, and
requesting information run from the date the insurer received unwritten
notice. 

Sec. 3.  Acceptance or rejection of claims.  Makes nonsubstantive changes.

Sec. 4.  Payment of claims.  Deletes language requiring surplus lines
insurers to pay a claim no later than the 20th business day after the
notice or date a specified act is performed. 

Sec. 5.  Exemption.  Deletes specified exemptions to which this article
does not apply. Deletes language providing that this article does not apply
to Chapter 20A of this code except as provided in Section 9 of that
chapter.  Redesignates existing Subsection (d) to Subsection (c).  Makes
nonsubstantive changes. 

Sec. 6.  Damages. Prohibits an insurer from denying liability for a claim
made pursuant to an insurance policy if the insurer does not comply with
this article.  Requires the 18 percent penalty for noncompliance with this
article to begin accruing on the violation date and requires the penalty to
continue until the claim is paid in full.  Makes nonsubstantive changes. 
 
Sec. 7.  Cumulative remedies.  Makes no change to this section.

Sec. 8.  Liberal construction.  Makes no change to this section.

SECTION 2.Effective date: September 1, 1999.
  Makes application of this Act prospective.

SECTION 3.Emergency clause.