81R2464 PMO-D
By: Alonzo H.B. No. 198
A BILL TO BE ENTITLED
AN ACT
relating to certain unfair practices in the settlement of insurance
claims involving noneconomic damages.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 541, Insurance Code, is
amended by adding Section 541.0601 to read as follows:
Sec. 541.0601. UNFAIR SETTLEMENT PRACTICES IN RELATION TO
CERTAIN DAMAGES. (a) In this section:
(1) "Artificial intelligence application" means a
computer application that mimics human thought and cognitive
processes to solve complex problems.
(2) "Noneconomic damages" means damages awarded for
the purpose of compensating a claimant for physical pain and
suffering, mental or emotional pain or anguish, loss of consortium,
disfigurement, physical impairment, loss of companionship and
society, inconvenience, loss of enjoyment of life, injury to
reputation, and all other nonpecuniary losses of any kind other
than exemplary damages.
(b) An insurer may not settle or adjust a claim by an insured
or beneficiary that is, in whole or part, for compensation for
noneconomic damages without a complete review of the claim by an
individual who is authorized to evaluate the claim based on the
facts of the claim and the individual's judgment.
(c) It is an unfair method of competition or an unfair or
deceptive act or practice in the business of insurance to evaluate a
claim described by Subsection (b) using:
(1) an artificial intelligence application or other
computer software application; or
(2) any other method without the complete review of
the claim by an individual as required by Subsection (b).
(d) This section applies to a claim made by a third party
asserting one or more claims against an insured covered under a
liability insurance policy.
SECTION 2. Section 542.003(b), Insurance Code, is amended
to read as follows:
(b) Any of the following acts by an insurer constitutes
unfair claim settlement practices:
(1) knowingly misrepresenting to a claimant pertinent
facts or policy provisions relating to coverage at issue;
(2) failing to acknowledge with reasonable promptness
pertinent communications relating to a claim arising under the
insurer's policy;
(3) failing to adopt and implement reasonable
standards for the prompt investigation of claims arising under the
insurer's policies;
(4) not attempting in good faith to effect a prompt,
fair, and equitable settlement of a claim submitted in which
liability has become reasonably clear;
(5) compelling a policyholder to institute a suit to
recover an amount due under a policy by offering substantially less
than the amount ultimately recovered in a suit brought by the
policyholder;
(6) failing to maintain the information required by
Section 542.005;
(7) using an artificial intelligence application,
other computer software application, or other method to evaluate a
claim in violation of Section 541.0601; or
(8) [(7)] committing another act the commissioner
determines by rule constitutes an unfair claim settlement practice.
SECTION 3. The change in law made by this Act applies only
to a claim that is filed on or after the effective date of this Act.
A claim that is filed before the effective date of this Act is
governed by the law as it existed at the time the claim was filed,
and that law is continued in effect for that purpose.
SECTION 4. This Act takes effect September 1, 2009.