Bill: HB 1774, 85(R) - 2017

Relating to insurance claims and certain prohibited acts and practices in the business of insurance.

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.