Opinion ID: 2099901
Heading Depth: 1
Heading Rank: 1

Heading: statutory duty to attempt to settle

Text: Article 21.21 defines insurer conduct that constitutes unfair competition methods or unfair or deceptive acts or practices. TEX. INS.CODE art. 21.21. Before the Legislature last amended section 16 of article 21.21, the provision read: Any person who has sustained actual damages as a result of another's engaging in an act or practice declared in Section 4 of this Article or in rules or regulations lawfully adopted by the Board under this Article to be unfair methods of competition or unfair or deceptive acts or practices in the business of insurance ... may maintain an action against the person or persons engaging in such acts or practices. TEX. INS.CODE art. 21.21, § 16 (emphasis added) (amended by Act of June 8, 1995, 74th Leg., ch. 414, § 13, 1995 Tex. Gen. Law 3000-01). State Board of Insurance Order No. 18663, adopted under article 21.21, prohibits unfair or deceptive practices as defined by the provisions of the Insurance Code. Tex. Bd. of Ins., Bd. Order No. 18663 (codified at 28 Tex. Admin. Code § 21.3). The Insurance Code, in article 21.21-2, defines an unfair practice as [n]ot attempting in good faith to effectuate prompt, fair, and equitable settlements of claims submitted in which liability has become reasonably clear. Tex. Ins.Code art. 21.21-2, § 2(b)(4). Notably, the 1995 amendments to article 21.21 section 16 eliminated the language or in rules or regulations lawfully adopted by the Board under this Article and added a detrimental reliance requirement for certain claims. Tex. Ins.Code art. 21.21, § 16. Moreover, as shown above, the Legislature amended article 21.21 in 1995 to define an insurer's unfair practice to include failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer's liability has become reasonably clear. Tex. Ins.Code art. 21.21, § 4(10)(a)(ii). Accordingly, article 21.21 now expressly incorporates the unfair settlement practice defined in article 21.21-2, with some limiting language, rather than incorporating that practice through the Insurance Board order and article 21.21-2.