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Advisory 95-09

CLAIM PAYMENT ESCROW ACCOUNT DEPLETION - FAILURE TO PAY BENEFITS IN ACCORDANCE WITH THE CODE

The Commission has identified instances where a carrier or servicing contractor on a policy with a deductible premium failed to timely pay accrued income benefits because the escrow account set up to service the policy was depleted. The carrier or servicing contractor must make timely benefits payments even if and escrow account is depleted. Carriers, servicing contractors, and policyholders using escrow accounts or similar banking arrangements must examine these relationships to ensure compliance.

Failure to pay benefits as they accrue may result in an administrative violation for each day of non-compliance and a penalty of up to $5,000 per day as provided by 409.021 or 409.023 of the Texas Labor Code.

Signed October 17, 1995.

Todd K. Brown, Executive Director



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