Bill Text: TX SB1628 | 2015-2016 | 84th Legislature | Comm Sub

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Bill Title: Relating to insurance claims and certain prohibited acts and practices in or in relation to the business of insurance.

Spectrum: Partisan Bill (Republican 3-0)

Status: (Engrossed - Dead) 2015-05-22 - Committee report sent to Calendars [SB1628 Detail]

Download: Texas-2015-SB1628-Comm_Sub.html

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84R28798 AJA-F
By: Taylor of Galveston, et al. S.B. No. 1628
(Smithee)
Substitute the following for S.B. No. 1628: No.

A BILL TO BE ENTITLED
AN ACT
relating to insurance claims and certain prohibited acts and
practices in or in relation to the business of insurance.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 541.151, Insurance Code, is amended to
read as follows:
Sec. 541.151. PRIVATE ACTION FOR ACTUAL DAMAGES AUTHORIZED.
Except as provided by Section 541.1511, a [A] person who sustains
actual damages may bring an action against another person for those
damages caused by the other person engaging in an act or practice:
(1) defined by Subchapter B to be an unfair method of
competition or an unfair or deceptive act or practice in the
business of insurance; or
(2) specifically enumerated in Section 17.46(b),
Business & Commerce Code, as an unlawful deceptive trade practice
if the person bringing the action shows that the person relied on
the act or practice to the person's detriment.
SECTION 2. Subchapter D, Chapter 541, Insurance Code, is
amended by adding Section 541.1511 to read as follows:
Sec. 541.1511. ACTION RELATING TO CERTAIN CLAIMS FOR
PROPERTY DAMAGE: INSURER ELECTION FOR LEGAL RESPONSIBILITY FOR
ACTIONS OF AGENTS AND EMPLOYEES. (a) This section applies only to
an action brought by an insured relating to or arising from a claim
for damage to or loss of real property or tangible personal property
made under an insurance policy providing coverage for damage to or
loss of real property.
(b) Except as provided by Subsection (d), an insured seeking
damages in an action to which this section applies may not file or
maintain an action under this subchapter against an employee,
agent, representative, or adjuster issuing policies, handling
claims, or performing other acts on behalf of an insurer, and any
such action shall be immediately dismissed, if:
(1) the employee, agent, representative, or adjuster
was not named in a notice given under Section 541.1541; or
(2) not later than the 30th day after the date the
notice given under Section 541.1541 is received, the insurer agrees
in a document provided to the insured to be liable for any act or
omission of the employee, agent, representative, or adjuster
related to or arising out of the insured's claim.
(c) A dismissal under Subsection (b)(1) or an agreement
under Subsection (b)(2) does not limit the insurer's liability and
does not limit the insurer's vicarious liability for any act or
omission of the employee, agent, representative, or adjuster
related to or arising out of the insured's claim.
(d) An insured may file and maintain an action described by
Subsection (b) if the insured shows and the court finds that the
insured cannot reasonably expect to secure complete relief unless
the employee, agent, representative, or adjuster is made a party to
the action.
SECTION 3. The heading to Section 541.152, Insurance Code,
is amended to read as follows:
Sec. 541.152. ACTUAL DAMAGES, ATTORNEY'S FEES, AND OTHER
RELIEF.
SECTION 4. The heading to Section 541.154, Insurance Code,
is amended to read as follows:
Sec. 541.154. PRIOR NOTICE OF ACTION OTHER THAN ACTION
RELATING TO CLAIM FOR PROPERTY DAMAGE.
SECTION 5. Section 541.154(a), Insurance Code, is amended
to read as follows:
(a) Except as provided by Section 541.1541, a [A] person
seeking damages in an action against another person under this
subchapter must provide written notice to the other person not
later than the 61st day before the date the action is filed.
SECTION 6. Subchapter D, Chapter 541, Insurance Code, is
amended by adding Section 541.1541 to read as follows:
Sec. 541.1541. PRIOR NOTICE OF ACTION RELATING TO CERTAIN
CLAIMS FOR PROPERTY DAMAGE. (a) This section applies only to an
action brought by an insured relating to or arising from a claim for
damage to or loss of real property or tangible personal property
made under an insurance policy providing coverage for damage to or
loss of real property.
(b) An insured seeking damages in an action to which this
section applies must provide written notice complying with this
section to all potential defendants not later than the 61st day
before the date the action is filed.
(c) The notice required by this section must state:
(1) the specific damage items and the amount alleged
to be owed by the insurer under the insurance policy;
(2) the amount of the actual damages, other damages,
interest, and expenses, specifically stated for each item, that the
insured alleges are owed by the insurer;
(3) the amount of attorney's fees the insured
reasonably has incurred as of the date the notice is given in
asserting the claim against the insurer;
(4) an amount that includes the amounts described by
Subdivisions (1) through (3) that the insured will accept in full
and final satisfaction of the claim; and
(5) the name of every person to whom notice is given
under this section and a brief description of each person's
relationship to the insured's claim.
(d) If the amount sought by the insured in the action
involves a claim for damage items not previously submitted to the
insurer, not later than the 15th day after the date notice under
this section is provided to an insurer, the insurer may request that
the insured provide copies of reports, estimates, photographs, and
other items reasonably supporting the insured's additional damage
items. If a request is made in accordance with this subsection, the
insured must provide the requested information before filing an
action to which this section applies.
(e) A presuit notice under this section is not required if
giving notice is impracticable because the action:
(1) must be filed to prevent the statute of
limitations from expiring; or
(2) is asserted as a counterclaim.
SECTION 7. Section 541.155, Insurance Code, is amended to
read as follows:
Sec. 541.155. ABATEMENT. (a) A person against whom an
action under this subchapter is pending who does not receive [the]
notice or requested information as required by Section 541.154 or
541.1541 may file a plea in abatement not later than the 30th day
after the date the person files an original answer in the court in
which the action is pending.
(b) The court shall abate the action if, after a hearing,
the court finds that the person is entitled to an abatement because
the claimant did not provide [the] notice or requested information
as required by Section 541.154 or 541.1541.
(c) An action is automatically abated without a court order
beginning on the 11th day after the date a plea in abatement is
filed if the plea:
(1) is verified and alleges that the person against
whom the action is pending did not receive [the] notice or requested
information as required by Section 541.154 or 541.1541; and
(2) is not controverted by an affidavit filed by the
claimant before the 11th day after the date the plea in abatement is
filed.
(d) An abatement under this section continues until the 60th
day after the date notice or requested information is provided in
compliance with Section 541.154 or 541.1541.
(e) This section does not apply if Section 541.154(c) or
541.1541(e) applies.
SECTION 8. Subchapter B, Chapter 542, Insurance Code, is
amended by adding Section 542.0595 to read as follows:
Sec. 542.0595. PRIOR NOTICE OF ACTION RELATING TO CERTAIN
CLAIMS FOR PROPERTY DAMAGE; ABATEMENT. (a) An insured may not
bring suit under Section 542.060 in connection with a claim for
damage to or loss of real property or tangible personal property
made under an insurance policy providing coverage for damage to or
loss of real property unless the insured has provided written
notice to the insurer with respect to the claim in accordance with
Section 541.1541 and any information requested by the insurer in
accordance with that section.
(b) A suit under Section 542.060 for which notice is
required by this section is subject to abatement to the same extent
and in the same manner provided by Section 541.155 for an action
under Subchapter D, Chapter 541.
SECTION 9. Section 542.060, Insurance Code, is amended to
read as follows:
Sec. 542.060. LIABILITY FOR VIOLATION OF SUBCHAPTER.
(a) If an insurer that is liable for a claim under an insurance
policy is not in compliance with this subchapter, the insurer is
liable to pay the holder of the policy or the beneficiary making the
claim under the policy, in addition to the amount of the claim,
interest on the unpaid amount of the claim at the rate of 18 percent
a year as damages, together with reasonable attorney's fees.
(a-1) In determining the amount of attorney's fees awarded
under Subsection (a), the trier of fact shall consider:
(1) the time and labor required, the novelty and
difficulty of the questions involved, and the skill requisite to
perform the legal service properly;
(2) the likelihood, if apparent to the claimant, that
the acceptance of the particular employment will preclude other
employment by the attorney;
(3) the fee customarily charged in the locality for
similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the claimant or by
the circumstances;
(6) the nature and length of the professional
relationship with the claimant;
(7) the experience, reputation, and ability of the
attorney performing the services; and
(8) whether the fee is fixed or contingent on results
obtained or uncertainty of collection before the legal services
have been rendered.
(b) If a suit is filed, interest and [the] attorney's fees
payable under this section shall be taxed as part of the costs in
the case.
(c) The liability for interest and attorney's fees provided
by this section is the exclusive remedy for a violation of this
subchapter. This section is not intended to affect a right or
remedy provided by Chapter 541 or any other law outside this
subchapter.
(d) If a claim for a loss has been paid by the insurer and a
suit under this section arises out of a supplemental claim for that
loss, interest awarded under this section on the supplemental claim
begins to accrue on the 60th day after the date the insurer receives
notice of the supplemental claim.
SECTION 10. Subtitle A, Title 10, Insurance Code, is
amended by adding Chapter 1808 to read as follows:
CHAPTER 1808. CERTAIN CLAIMS FOR PROPERTY DAMAGE
Sec. 1808.001. DEFINITION. In this chapter, "claim for
property damage" means a claim to which this chapter applies.
Sec. 1808.002. APPLICABILITY OF CHAPTER. This chapter
applies only to a first party claim for damage to or loss of real
property or tangible personal property made under an insurance
policy:
(1) providing coverage for damage to or loss of real
property; and
(2) issued by:
(A) any insurer authorized to write property
insurance in this state, including:
(i) an insurance company;
(ii) a reciprocal or interinsurance
exchange;
(iii) a mutual insurance company;
(iv) a capital stock insurance company;
(v) a county mutual insurance company;
(vi) a farm mutual insurance company; or
(vii) a Lloyd's plan;
(B) an eligible surplus lines insurer; or
(C) the FAIR Plan Association.
Sec. 1808.003. CLAIM FILING PERIOD. (a) Subject to
Subsection (b), failure to provide notice of a claim for property
damage by the second anniversary of the date on which the damage to
or loss of property that is the basis of the claim occurs is an
absolute bar to recovery on the claim.
(b) Recovery on a claim for property damage is not barred if
in an action to recover on the claim the trier of fact determines
the claimant had good cause not to provide notice of the claim in
the time prescribed by Subsection (a).
(c) For the purposes of Subsection (b), "good cause"
includes military deployment.
(d) Except as provided by this subsection, nothing in this
section precludes an insurer from raising any defense available
under the terms of its policy relating to prompt notice or that is
otherwise available under the law. If an insurer raises a defense
based on the fact that notice of claim was not made in accordance
with the policy terms, the defense applies only on a showing and to
the extent that the insurer was prejudiced by notice not being made
in accordance with the policy terms.
Sec. 1808.004. APPRAISAL STANDARDS. (a) The commissioner
by rule shall adopt standards for minimum fairness for provisions
in insurance policies described by Section 1808.002 that provide an
appraisal process for claims for property damage.
(b) Standards adopted under this section must:
(1) take into consideration the expense involved in
submitting a claim to the appraisal process; and
(2) provide for a process that:
(A) is not unnecessarily complicated; and
(B) is designed to yield a prompt and fair
resolution of the disputed matter.
Sec. 1808.005. APPROVAL OF APPRAISAL PROVISIONS. (a) An
insurer described by Section 1808.002 may submit to the
commissioner for purposes of Section 1808.006 any policy form used
or proposed to be used by the insurer to write insurance policies
described by Section 1808.002 that contains provisions that provide
an appraisal process for claims for property damage.
(b) If the commissioner determines the appraisal provisions
in a policy form submitted under this section comply with the
minimum standards adopted by the commissioner under Section
1808.004, the commissioner shall approve the appraisal provisions
for purposes of Section 1808.006.
Sec. 1808.006. LIABILITY LIMITATIONS. (a) Except as
provided by this section, an insurer is not liable in any private
cause of action under Chapter 541 or 542 relating to or arising from
a claim for property damage if:
(1) the policy under which the claim is made contains
appraisal provisions:
(A) approved by the commissioner under Section
1808.005; or
(B) substantially similar to provisions approved
by the commissioner under that section;
(2) the insurer:
(A) timely accepts the insured's demand for
appraisal; or
(B) makes a demand for appraisal not later than
the 30th day after the later of the date the insurer receives the
notice of the claim required by Section 541.1541 or 542.0595, as
applicable, or the date the insurer receives information related to
the claim timely requested by the insurer in accordance with
Section 541.1541 for purposes of that section or Section 542.0595,
as applicable, including notice or requested information received
after an abatement of an action under Section 541.155 or 542.0595;
and
(3) the insurer:
(A) participates in the appraisal process in good
faith; and
(B) pays or tenders, not later than the 15th day
after the date the insurer receives the appraisal award:
(i) the full amount of the appraisal award,
less the amount of any deductible or previous payment on the claim;
and
(ii) interest on the amount paid under
Subparagraph (i) at the rate of 12 percent annually.
(b) For purposes of this section, if there is a dispute as to
whether the insurer is to pay actual cash value or replacement cost,
the insurer must pay or tender an amount under Section (a)(3)(B)
that is based on the replacement cost.
(c) Interest to be paid under Subsection (a) accrues
beginning on the later of:
(1) the fifth business day after the latest date on
which the insurer is required to provide notice of acceptance or
rejection of the relevant claim under Section 542.056; or
(2) if payment of the relevant claim or part of the
relevant claim is conditioned on the performance of an act by the
claimant, the fifth business day after the date the act is
performed.
SECTION 11. Section 4102.051(a), Insurance Code, is amended
to read as follows:
(a) A person may not act as a public insurance adjuster in
this state or hold himself or herself out to be a public insurance
adjuster in this state unless the person holds a license [or
certificate] issued by the commissioner under Section 4102.053
or[,] 4102.054[, or 4102.069].
SECTION 12. Sections 4102.066(a) and (b), Insurance Code,
are amended to read as follows:
(a) The commissioner shall collect in advance the following
nonrefundable fees:
(1) for a public insurance adjuster license, an
application fee in an amount to be determined by rule by the
commissioner;
(2) for a nonresident public insurance adjuster
license, an application fee in an amount to be determined by rule by
the commissioner; and
(3) for each public insurance adjuster examination, a
fee in an amount to be determined by rule by the commissioner[; and
[(4) for a public insurance adjuster trainee
certificate under Section 4102.069, a registration fee in an amount
to be determined by rule by the commissioner].
(b) The amount of the fee for the renewal of a license [or a
certificate] issued under this chapter shall be determined by rule
by the commissioner.
SECTION 13. Section 4102.103, Insurance Code, is amended by
adding Subsection (d) to read as follows:
(d) A license holder may not enter into a contract with an
insured and collect a commission as provided by Section 4102.104
without the intent to actually perform the services customarily
provided by a licensed public insurance adjuster for the insured.
SECTION 14. Section 4102.104(d), Insurance Code, is amended
to read as follows:
(d) A public insurance adjuster may not accept any payment
that violates the provisions of this section [Subsection (c)].
SECTION 15. Section 4102.158, Insurance Code, is amended by
amending Subsection (a) and adding Subsections (d), (e), and (f) to
read as follows:
(a) A license holder may not:
(1) participate directly or indirectly in the
reconstruction, repair, or restoration of damaged property that is
the subject of a claim adjusted by the license holder; or
(2) engage in any other activities that may reasonably
be construed as presenting a conflict of interest, including
soliciting or accepting any remuneration from, [or] having a
financial interest in, or deriving any direct or indirect financial
benefit from, any salvage firm, repair firm, construction firm, or
other firm that obtains business in connection with any claim the
license holder has a contract or agreement to adjust.
(d) A license holder may not directly or indirectly solicit,
as described by Chapter 38, Penal Code, employment for an attorney
or enter into a contract with an insured for the primary purpose of
referring an insured to an attorney and without the intent to
actually perform the services customarily provided by a licensed
public insurance adjuster. This section may not be construed to
prohibit a license holder from recommending a particular attorney
to an insured.
(e) A license holder may not act on behalf of an attorney in
having an insured sign an attorney representation agreement.
(f) A license holder must become familiar with and at all
times act in conformance with the criminal barratry statute set
forth in Section 38.12, Penal Code.
SECTION 16. Section 4102.160, Insurance Code, is amended to
read as follows:
Sec. 4102.160. CERTAIN PAYMENTS PROHIBITED. A license
holder may not:
(1) advance money to any potential client or insured;
or
(2) pay, allow, or give, or offer to pay, allow, or
give, directly or indirectly, to a person who is not a licensed
public insurance adjuster a fee, commission, or other valuable
consideration for the referral of an insured to the public
insurance adjuster for purposes of [based on] the insured entering
into a contract with that public insurance adjuster or for any other
purpose[; or
[(3) otherwise offer to pay a fee, commission, or
other valuable consideration exceeding $100 to a person not
licensed as a public insurance adjuster for referring an insured to
the license holder].
SECTION 17. Subchapter D, Chapter 4102, Insurance Code, is
amended by adding Section 4102.164 to read as follows:
Sec. 4102.164. ACCEPTANCE OF REFERRAL PAYMENTS PROHIBITED.
(a) A licensed public insurance adjuster may not accept a fee,
commission, or other valuable consideration of any nature,
regardless of form or amount, in exchange for the referral by a
licensed public insurance adjuster of an insured to any third-party
individual or firm, including but not limited to an attorney,
appraiser, umpire, construction company, contractor, or salvage
company.
(b) The commissioner shall adopt rules necessary to
implement and enforce this section.
SECTION 18. The heading to Section 27.02, Business &
Commerce Code, is amended to read as follows:
Sec. 27.02. CERTAIN OFFERS MADE AND INFORMATION PROVIDED IN
CONNECTION WITH INSURANCE CLAIMS [FOR EXCESSIVE CHARGES].
SECTION 19. Section 27.02(a), Business & Commerce Code, is
amended to read as follows:
(a) A person who sells goods or services, including a
contractor, appraiser, estimator, or insurance restoration
contractor, commits an offense if, in connection with a claim for
property loss or damage under a property or casualty insurance
policy:
(1) the person advertises or promises to [provide the
good or service and to] pay, waive, absorb, rebate, subsidize,
credit, or otherwise cover for any reason[:
[(A)] all or part of any applicable insurance
deductible or other uninsured amount owed by an insured under the
terms of the policy; [or
[(B) a rebate in an amount equal to all or part of
any applicable insurance deductible;]
(2) [the good or service is paid for by the consumer
from proceeds of a property or casualty insurance policy; and
[(3)] the person knowingly provides or causes to be
provided to an insurer any estimate or other statement as to the
cost of repair for the good or service to be provided that has been
increased, inflated, or otherwise manipulated [charges an amount
for the good or service that exceeds the usual and customary charge
by the person for the good or service] by an amount equal to or
greater than all or part of the applicable insurance deductible or
other uninsured amount owed by an insured under the policy; or
(3) the person knowingly provides or causes to be
provided to an insurer any false information within any estimate,
bid, proposal, or other statement as to the scope of damage or cost
of repair for the good or service to be provided [paid by the person
to an insurer on behalf of an insured or remitted to an insured by
the person as a rebate].
SECTION 20. Section 4102.069, Insurance Code, is repealed.
SECTION 21. (a) The Texas Department of Insurance shall
conduct a study to determine the effectiveness of the changes in law
made by this Act. The study must determine:
(1) whether the changes in law made the affected
insurance policies more affordable;
(2) whether the changes in law made the affected
insurance policies more available;
(3) whether the changes in law resulted in a change in
the percentage of home buyers who qualify for home loans;
(4) the effect of the changes in law on litigation;
(5) the effect of the changes in law on consumer
complaints; and
(6) the effect of the changes in law on policy
deductibles.
(b) The commissioner of insurance may request and obtain
data from insurers as necessary to perform the study required by
this section.
(c) Not later than November 1, 2018, the Texas Department of
Insurance shall submit a written report detailing the findings made
by the department under this section to the lieutenant governor,
speaker of the house of representatives, and members of the
legislature.
(d) This section expires January 1, 2019.
SECTION 22. Chapter 541, Insurance Code, as amended by this
Act, applies only to conduct that occurs on or after the effective
date of this Act. Conduct that occurs before the effective date of
this Act is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 23. Subchapter B, Chapter 542, Insurance Code, as
amended by this Act, applies only to a claim for which notice of
claim is provided to an insurer on or after the effective date of
this Act. A claim for which notice of claim is provided to an
insurer before the effective date of this Act is governed by the law
as it existed immediately before the effective date of this Act, and
that law is continued in effect for that purpose.
SECTION 24. Chapter 1808, Insurance Code, as added by this
Act, applies only to a claim under an insurance policy delivered,
issued for delivery, or renewed on or after January 1, 2016. A
claim under a policy delivered, issued for delivery, or renewed
before January 1, 2016, is governed by the law as it existed
immediately before the effective date of this Act, and that law is
continued in effect for that purpose.
SECTION 25. The repeal by this Act of Section 4102.069,
Insurance Code, does not affect the authority of a person to act
under a temporary certificate issued by the Texas Department of
Insurance under that section before the effective date of this Act.
SECTION 26. Sections 4102.103(d) and 4102.158(d),
Insurance Code, as added by this Act, apply only to a contract
entered into or solicitation made on or after the effective date of
this Act.
SECTION 27. (a) Except as provided by this section,
Section 4102.104, Insurance Code, as amended by this Act, applies
only to payment for a service performed on or after the effective
date of this Act.
(b) Payment for a service performed before the effective
date of this Act or performed after the effective date of this Act
under a contract entered into before the effective date of this Act
is governed by the law as it existed immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 28. Section 4102.160, Insurance Code, as amended by
this Act, and Section 4102.164, Insurance Code, as added by this
Act, apply only to a referral made on or after the effective date of
this Act. A referral made before the effective date of this Act is
governed by the law as it existed immediately before the effective
date of this Act, and that law is continued in effect for that
purpose.
SECTION 29. The changes in law made by this Act apply only
to an offense committed on or after the effective date of this Act.
An offense committed before the effective date of this Act is
governed by the law in effect when the offense was committed, and
the former law is continued in effect for that purpose. For
purposes of this section, an offense was committed before the
effective date of this Act if any element of the offense occurred
before that date.
SECTION 30. This Act takes effect September 1, 2015.