On January 6, 2011, the Texas State Office of Administrative Hearings (SOAH) ordered that insurers cannot avoid the Prompt Payment Statute of the Texas Insurance Code. The Prompt Payment Statute requires insurers to decide whether they will accept or deny a 
claim within 15 days after recieving proof of the claim from the insured homeowner. Under special circumstances, the period can be extended to a total of 60 days. The Texas Windstorm Insurance Association (TWIA) petitioned SOAH to consider whether they would be permitted to extend this period further in order to request documents from third parties, such as claim adjusters, fact witnesses, and experts. This extension process has been repeatedly abused to avoid timely payment to homeowners in desperate straits.
Upon the review of submitted briefs from TWIA and the Texas Department of Insurance, Richard R. Wilfong, the SOAH administrative judge presiding, ruled that the Texas Insurance Code does not permit an insurer to delay its obligaitons to pay claims promptly by simply claiming they need further documents by third parties.
TWIA is an insurer heavily involved in Hurricane Ike claims. The decision, however, could have ramifications beyond property insurance claims. It helps to eliminate an avenue for insurance carriers to delay payment to people in need after a disaster or accident and avoid their prompt payment obligations by making unlimited demands for “additional information” from third parties.
The decision is available here.
