| Vote Recommendation | Economic Freedom | Property Rights | Personal Responsibility | Limited Government | Individual Liberty |
|---|---|---|---|---|---|
| Yes | Neutral | Positive | Positive | Neutral | Positive |
Relating to insurance
claims and certain prohibited acts and practices in or in relation to the
business of insurance; amending provisions that are or may be subject to a
criminal penalty.
No significant fiscal implication to the State is anticipated.
SB 1628 would make multiple changes in the Insurance Code
and Business & Commerce Code.
In Chapter 541 (Unfair Methods of Competition and Unfair or
Deceptive Acts or Practices Prohibited), this legislation adds a new section
that would prohibit a plaintiff from seeking damages against an employee,
agent, representative, or adjuster performing acts on behalf of an insurer. This
would only apply if the individual working for the insurer was not mentioned in
the prior notice or the insurer absolves him or her of any liability.
Another section added to Chapter 541 would implement prior
notice requirements for filing a court case against an insurer for damages or
loss of property that the individual alleges should have been covered under his
or her policy. For example, this section would require an individual seeking
damage to provide a written prior notice to the insurer no later than 61-days
before filing the action.
Amendments to Chapter 541 would allow reasons for dismissing
a case. For example, a judge may dismiss a case if the claimant fails to
provide prior notice to the insurer.
In Chapter 542 (Processing and Settlement of Claims),
modifications are made to existing statute on when an insurer is liable under a
claim. SB 1628 would add a new provision that an insurer is liable for a claim
under an insurance policy if it “knowingly fails to act.” This means that the
claimant must prove that the insurer was actually aware at the time of the act
that it was failing to comply with a subchapter requirement.
This legislation would add a new chapter, Chapter 1808
regarding claims for property damage. The chapter would require that a claim
for property damages to be submitted to an insurer no later than two years
after the damage occurred.
Changes to Chapter 4102 (Public Insurance Adjusters) would
prevent a licensed insurance adjuster from soliciting employment for an
attorney or contracting with an insured individual just to refer that person to
an attorney. In other words an adjuster would be prohibited from acting on
behalf of an attorney. This is to prevent a conflict of interest. Additionally, an insurer may not accept
payment for referring services to a third-party or law firm.
Finally, changes to Chapter 27 (Fraud) in the Business &
Commerce Code would amend and add new provisions that an insurance contractor,
appraiser, estimator, and insurance restoration contractor may not knowingly
commit an insurance code violation. Such a violation would be considered an
offense.
This legislation implements practical standards for genuine
insurance disputes. Currently, in the event of a catastrophic weather-related
event in Texas, property damage claims have become a massive money maker for
attorneys to turn these claims into a tort. The author’s statement says that
third-party contractors and adjusters will set up mutual agreements where the
adjuster or contractor will refer business to the attorney in return for a fee,
but they end up inflating actual damage assessments while skirting certain
laws. Policyholders are inevitably left in
the dark as to what is actually occurring.
SB 1628 would implement certain changes that would require a
policyholder to be notified if they are about to be entered into a lawsuit
seeking damages. Additionally, it sets reasonable periods for when certain case
filings must be submitted in such cases. Moreover, this legislation limits the exploitation
of policyholders and insurers. For instance, in order for an insurer to be
found liable for damages, this bill would require that the defendant’s attorney
to prove that the insurer “knowingly” violated insurance code provisions. This
is an important legal standard because it harkens back to the founding of our
country: a person should be guilty or liable if their actions were purposefully
negligent or harmful. Punishing a person or entity for an innocent mistake is
not the same as committing the act intentionally or with negligence.
It is important to remember that this legislation does not
undermine a person’s right to file a bona fide case with the court to dispute an
insurer’s coverage. This bill would reign in those lawyers that are applying
mass torts to property damage claims. For this reason, we support SB 1628
because it protects the private property and individual liberty of a person. It protects a person’s property from being exploited by another while it also protects an individual’s liberty because it does not
limit his or her access to the court system to file a bona fide claim.