Texas COVID-19 Insurance Update: Certain Deadlines Extended

Houston, TX – On March 20, Governor Abbott suspended certain claim-handling deadlines under the Texas Insurance Code. Yesterday, the Commissioner of Insurance determined that the COVID-19 pandemic is a disaster under Texas Insurance Code Section 542.059(b). The Commissioner’s Bulletin can be found at: https://www.tdi.texas.gov/bulletins/2020/B-0007-20.html. Taken together, the Governor’s suspension and the Commissioner’s declaration extend claim-handling deadlines under the Prompt Payment of Claims Act for an additional 15 days to help carriers respond to the COVID-19 outbreak. This extension will be in effect until the Governor’s suspension and Commissioner’s declaration are lifted. Under the new bulletin, carriers must:

  • Acknowledge claims within 30 days of submission. (Tex. Ins. Code § 542.055(a)(1)).
  • Commence an investigation within 30 days of claim submission. (Tex. Ins. Code § 542.055(a)(2)).
  • Request from a claimant all items, statements, and forms that the insurer reasonably believes, at that time, are necessary to accept or deny the claim within 30 days. (Tex. Ins. Code § 542.055(a)(3)).
  • Provide written notice of the (1) acceptance of a claim, (2) rejection of a claim, or (3) the basis why additional time is needed to accept or reject a claim within 30 days from receipt of the items, statements, and forms reasonably requested from a claimant (45 days if the carrier reasonably believes the loss resulted from arson). (Tex. Ins. Code §§ 542.056(a)-(b), (d)).
  • If an extension of time to make a claim determination is requested, the carrier must accept or reject the claim within 60 days following the request for additional time. (Tex. Ins. Code § 542.056(d)).
  • Issue payments within 20 days following acceptance. (Tex. Ins. Code § 542.057(a)).

Additionally, a life insurer that receives notice of an adverse, bona fide claim to all or part of the proceeds of the policy before the applicable payment deadline shall (1) pay the claim or (2) file an interpleader action and tender benefits into the registry of the court within 105 days after receipt of all items, statements, and forms reasonably requested from the claimant. (Tex. Ins. Code § 542.058(c)). Please note that the above deadlines do not all apply to eligible surplus lines carriers.

Finally, Bulletin B-0007-20 contains a vague plea to carriers to work with policyholders experiencing financial hardship due to COVID 19. The Bulletin’s examples of “work[ing] with policyholders” include “use [of] grace periods for payments, temporary suspension of premium payments, payment plans, and other actions to allow continuing insurance coverage as appropriate.” [emphasis added]. Without any details, the Bulletin indicates that some regulatory relief will be provided to carriers that remain flexible regarding insured’s payment of premiums.

For more information, please contact McDowell Hetherington attorney Brad Aiken or Bobby Debelak.