Bill Caption

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

Fiscal Notes

From the LBB: no significant fiscal implication to the state is anticipated.

Bill Analysis

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.

SB 10 would make numerous changes to the Business & Commerce and Insurance Codes to address the issue with four major provisions to take note. First, a disgruntled insured’s lawyer would 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, if a defendant was not given a pre-suit notice specifying the alleged amount owed to the insured at least 61 days before an action is filed, the court would be prohibited from awarding any attorney's fees to the claimant incurred after the date the defendant files the pleading with the court.

Vote Recommendation Notes

This bill contains provisions which increase the scope of government by adding new regulations on the conditions under which an insured may file suit against an insurer. At the same time the bill would cut down on the cost of government by limiting the number of frivolous lawsuits which ultimately drive up costs for consumers. We remain neutral on SB 10.