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Commissioner’s Bulletin # B-0064-05

October 10, 2005

TO: TO ALL INSURANCE COMPANIES, CORPORATIONS, EXCHANGES, MUTUALS, RECIPROCALS, ASSOCIATIONS, LLOYDS, OR OTHER INSURERS WRITING PROPERTY AND CASUALTY INSURANCE IN THE STATE OF TEXAS AND TO AGENTS AND REPRESENTATIVES AND THE PUBLIC GENERALLY

RE: CARRIERS CLAIMS SETTLEMENT PRACTICES IN RESPONSE TO HURRICANE RITA.

It has come to the attention of the Texas Department of Insurance (TDI) that certain carriers are not responding to policyholders' claims resulting from losses caused by Hurricane Rita. Specially, the TDI has received complaints that policyholders have been told that there are gray areas in coverage, that policyholders must travel to various areas of the state to pick up settlement checks, that insurance claims handling areas (temporary or permanent) are closed for the evening when policyholders are waiting for relief, or that property cannot be inspected even though there are means available to carriers to find out the actual condition of the property, such as satellite pictures, contact with civil authorities or situations where condition of the property is not relevant to the propriety of payment of the claim.

While recognizing the toll of the hurricane on both policyholders and carriers, TDI must remind carriers of their duties to their policyholders.

The Texas Insurance Code has specific provisions concerning claims settlement practices which carriers must follow. Further, under both statutory and common law, carriers have a duty to deal fairly and in good faith with their policyholders.

TDI has begun market conduct examinations of certain carriers to ensure regulatory compliance. TDI will continue to monitor carriers for compliance with claims handling requirements including determinations regarding the reasonableness of paying claims appropriately, in good faith including utilizing the new procedures for market conduct examinations as established by the Insurance Market Conduct Surveillance Act (79th Legislature, Regular Session).

Questions regarding this bulletin may be directed to Betty Patterson, Senior Associate Commissioner, Financial Division at 512-322-5040.

Mike Geeslin
Commissioner of Insurance






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