Lately I have had several public insurance adjusters call me about a specific problem with Lloyds.1 The public adjuster and the Lloyds (third-party) adjuster agree on the scope and amount of damages on a claim. Then Lloyds never pays. It’s not that Lloyds refuses to pay. They just don’t pay, like for a real long time. Usually there are lots of comments about Lloyds being across the pond and time differences and things like that, but this is not 1492 when Columbus sailed the ocean blue. We are in the age of air travel, FEDEX, the Internet, bank wiring funds, etc. Hell, I went to the much-maligned US Post Office the other day to send something to the UK and even the US Post Office got it there in five days.
What is strange is that even though Lloyds is a loose conglomerate of syndicates, I am seeing a pattern in this failure to pay. There is a trend by Lloyds not paying agreed scopes. I have a case on file right now where its been a year and Lloyds’ has not paid. In that case my client did all the work on the property and turned in his receipts to Lloyds a year ago asking for his RCV hold back. Lloyds has effectively ignored him for a year. So I sued Lloyds and we are about to get paid all of the hold back, plus 18% interest for a year, plus my attorney fees.
I have had other public adjusters say that they thought Lloyds was allowed to delay a bit because they were in the UK. That is not completely true. In a previous version of this blog I mistakenly cited Texas Insurance Code Section 542.057(a) to the effect that Lloyds had five business days after date of notice is made to pay the claim. However, one of my very worthy opponents in this business, Paige Jones at Phelps Dunbar, was kind enough to point out that Section 542.057(c) applies to Lloyds. That section provides:
If the insurer is an eligible surplus lines insurer, the insurer shall pay the claim not later than the 20th business day after the notice or the date the act is performed, as applicable.2
Therefore, if Lloyds agrees to pay a claim (or part of a claim) then is has twenty business days to pay it. If not, then it owes Prompt Payment Act damages of 18% interest. But not only that, this failure to pay within five days is a violation of Texas Insurance Code Section 541.060(a)(2), which requires an insurer 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.” There is nothing more clear that when two opposing adjusters agree on the scope and damages. However, that is only the first step. As my old boss used to say, “There is a case within the case.” A settlement is not a settlement until it is funded. Agreeing to pay, but then not paying is not a settlement. Rather it is a failure to effectuate a prompt settlement. After a settlement is agreed to, Lloyds has five days to pay up. If not, then they are in violation of Chapter 541.060 of the Insurance Code (statutory bad faith) and the Prompt Payment Act. So it is not just 18% interest that Lloyds is exposing itself to with this flippant attitude about paying claims. It is opening itself up to statutory bad faith damages.
I hope some person in charge and affiliated with Lloyds will read this blog and get it. Until then, I will keep filing suits for policyholders who have an agreed settlement with Lloyds, but no funding.
1 We generally know that Lloyds is really a bunch of syndicates that underwrite insurance policies. However, for purposes if this blog I will generally refer to them as Lloyds.
2 Texas Insurance Code Section 542.057(c).