85(R) - 2017
Senate Business & Commerce
Senate Business & Commerce
Property & Casualty Insurance
Relating to insurance claims and certain prohibited acts and practices in the business of insurance.
No significant fiscal implication to the state is anticipated.
In a recent report
to the House Insurance Committee and Senate Business and Commerce Committee, the Department of Insurance found that there has been an increase in the rate of hail and windstorm claims in which policyholders sue insurers. Through 2011, the lawsuit rate was about one in 1,000 claims jumping to one in 50 to 60 claims since 2012. It has been a common practice for some adjusters and roofers to bring cases to attorneys to go to court, which increases the time and cost of claims.
HB 1774 would make numerous changes to the Business & Commerce and Insurance Codes to address the issue with four major provisions to take note. First, would be that a disgruntled insured’s lawyer would only be permitted to sue for an alleged breach of contract, alleged negligence, misrepresentation, fraud, or breach of common law duty, or deceptive trade practices. Next, before an action is filed, written notice must be given no later than 60 days in advance to give the insurer time to resolve the claim. Also, if an insurer unconditionally elects to accept whatever liability the agent might have for acts or omissions relating to the claim, the claimant can not file an action against the agent which curbs transferring cases to federal courts. Finally, attorney fees would be limited if their client gets less than demanded in lawsuits and prohibit the payment of attorney fees if the insurance company can prove the claimant’s attorney used intermediaries to recruit clients.
Vote Recommendation Notes
Although this bill increases regulation on the procedure of filing lawsuits, private property rights would be strengthened by prohibiting the collection of attorney fees if the insurance company can prove the claimant's attorney used intermediaries to recruit clients for hailstorm claim cases which limits the incentive to drag out cases and increase the cost of claims. This bill would also have the benefit of reducing frivolous lawsuits. While this legislation addresses a real and growing problem, we remain neutral due to the conflicting liberty principles; we are sympathetic to the aims of this bill we are unable to endorse all of its provisions.
American Insurance Association
Independent Insurance Agents of Texas
Property Casualty Insurers Association of America
Texans for Lawsuit Reform
Texas Association of Builders
Texas Association of Business
Texas Coalition for Affordable Insurance Solutions
Texas Conservative Coalition
Texas Farm Bureau Insurance
Texas Surplus Lines Association
Texas Trial Lawyers Association