An article by Gravely PC founder Marc Gravely has been featured in The Texas Lawbook. “One Nation Under Insurance: The Insurance Industry’s Hold on Our Country, Our State, and Our Pocketbooks – Part 2: The Claims Practices Statute” is the second in a series of articles on the insurance industry’s impact on the country and the state of Texas.
The article highlights the Prompt Payment of Claims Act, Chapter 542 of the Texas Insurance Code, which was created to prevent insurance carriers from engaging in unfair practices.
Initially, the statute set penalties for delayed payments to 18% and allowed insureds to receive attorney’s fees if forced to pursue unpaid policy benefits. But carriers, many of whom are not Texas companies, have succeeded in securing significant changes to potential penalties for insurance companies who delay investigating or paying policy benefits.
The changes include:
- Reducing the penalties for delayed payment of claims from 18% to a figure derived by adding 5% to the prime rate, which currently amounts to 13.5%.
- The addition of Chapter 542A, which restricts the ability to recover attorney’s fees and is contingent upon the insured giving the carrier a prescribed notice before filing suit.
Chapter 542A also prevents foreign insurance companies from being subject to the jurisdiction of Texas state courts.
In the article, Mr. Gravely writes, “This recitation of legislative actions favorable to foreign insurance companies but harmful to Texas businesses is by no means exclusive. These carriers have manipulated the system and chipped away at Texas policyholders’ rights and remedies in myriad other ways. And they’re not finished.”
To read the full article, click here.