Texas Department of Insurance

COMMISSIONER'S BULLETIN #B-0041-09

September 30, 2009

TO: ALL INSURANCE COMPANIES, CORPORATIONS, EXCHANGES, MUTUALS, RECIPROCALS, ASSOCIATIONS, LLOYDS, OR OTHER INSURERS LICENSED TO WRITE LIABILITY INSURANCE IN THE STATE OF TEXAS AND EACH POOL, JOINT UNDERWRITING ASSOCIATION, OR SELF-INSURANCE MECHANISM OR TRUST AUTHORIZED BY LAW TO INSURE ITS PARTICIPANTS, SUBSCRIBERS, OR MEMBERS AGAINST LIABILITY IN THE STATE OF TEXAS

RE: ENACTMENT OF HB 2877 BY THE 81ST TEXAS LEGISLATURE RELATING TO LIABILITY INSURANCE CLOSED CLAIM REPORTING

The purpose of this bulletin is to notify insurers of the requirements of House Bill 2877 (HB 2877), enacted by the 81^st Texas Legislature, effective September 1, 2009, relating to liability insurance closed claim reporting by insurers.  Insurers should review their reporting practices to ensure that they are in compliance with the laws described in this bulletin. 

HB 2877 amends §§38.153(a), 38.155(a) 38.157(a), and 38.158 of the Texas Insurance Code. 

Section 38.153(a) requires an insurer to file with the Department a closed claim report for each claim under a liability insurance policy which includes an indemnity payment for bodily injury over a specified threshold amount.  HB 2877 amends §38.153(a) by raising the threshold amount for closed claim reporting from $25,000 or more to $75,000 or more. 

HB 2877 amends Section 38.155(a) to provide that an insurer must file with the Department a summary closed claim report for a claim under a liability insurance policy if the indemnity payment for bodily injury is less than $75,000 but more than $25,000. 

HB 2877 amends Section 38.157(a) to provide that an insurer must file with the Department one report for all claims closed within the calendar year for which the indemnity payments for bodily injury are $25,000 or less, including claims for which an indemnity payment is not made on closing. 

HB 2877 adds Section 38.158(b) to allow the Department to use a statistical reporting agency to reconcile the closed claim data.  At this time the Department will continue to handle the reconciliation process. 

Pursuant to HB 2877, Commercial Bodily Injury Liability Closed Claim reports for claims that are closed on or after September 1, 2009 should be submitted using the following guidelines: 

• Claims with indemnity payments of more than $25,000 but less than $75,000 should be reported using the Short Form.
• Claims with indemnity payments of $75,000 or more should be reported using the Long Form.
•  Claims that were closed prior to September 1, 2009 should be reported using the following guidelines:
• Claims with indemnity payments of more than $10,000 but less than $25,000 should be reported using the Short Form.
• Claims with indemnity payments of $25,000 or more should be reported using the Long Form.>

The forms for filing closed claim reports and summary closed claim reports may be downloaded from the Department's web site at http://www.tdi.state.tx.us/company/datacall.html

As a result of the new liability insurance closed claim reporting thresholds, the Department will amend the Annual Aggregate Closed Claim Report to collect summary information on claims with indemnity payments of $25,000 or less.  For calendar year 2009 the Department will be using two Annual Aggregate Closed Claims Reports, one for the January 1, 2009 through August 31, 2009 time period and one for the September 1, 2009 through December 31, 2009 time period.  The Department will also be amending the 2009 Closed Claim Reconciliation Form to ensure that insurers are accurately reporting closed claims based on the appropriate indemnity payment ranges and the dates that the claims were closed.  The amended Aggregate and Reconciliation forms will be issued in the Spring of 2010. 

Questions relating to this bulletin should be directed to Vicky Knox at (512) 475-1879.

Gary Gola
Property & Casualty Data Services

For more information contact: PropertyCasualty@tdi.state.tx.us