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).

  • Daniel P. Wixted, Public Adjuster

    In New Jersey as an example, it was my understanding that if the Lloyd’s syndicate is underwriting policies as an Excess and Surplus Line Carrier they are not subject to the Dept of Banking and Insurance regulations.

  • shirley heflin

    Dear Mr. McGinnis:

    First, while your “hope” that someone w/Lloyds will read your post and “get it” is enlightening, the reality is that they will not! They haven’t for decades and – as evidenced by your post – they still do not. What is wonderful, however, is that you get it!! It’s not easy for insureds to locate a competent attorney specializing in property insurance law – especially one that “gets it.”

    Second, there are so many past cases and evidence
    documenting their continued acts of bad faith in many cases for decades now….when does it end?

    Third, Lloyds must be brought to justice! Their continued acts of callous disregard for their insured’s best interests, followed by their continued acts of bad faith, are akin to criminal behavior – in my opinion. I know there are civil theft damages, bad faith damages, but when do the people carrying out these acts for insurance companies pay for their egregious acts? They’re hiding behind a corporate shield, but when an experienced adjuster commits said acts, they have to know how it affects an insured, an insured’s life, family, business, home, etc.

    Finally, when (and if) an Insured finally prevails in litigation against their insurer and receives compensation, it all comes too late (for many). One cannot put a price on a lost business, a lost home, income, etc. The reality is we’re dealing with a billion dollar industry that doesn’t care about anything but their profits. We’ve been fighting for decades now, it’s just frustrating to see that insurance companies are still acting the same way.

    Tampa, FL

  • Tom Hamrick

    Surplus lines in Texas have 20 business days to pay a claim once agreed upon.

    Enjoyed your article.
    Tom Hamrick

  • Paige Jones
  • Patrick McGinnis

    Thank you Paige for pointing out the 20 business days instead of 5. I have corrected my blog accordingly. Unfortunately, the fifteen extra business days given to Lloyds did not help any of the situations I have been presented with. When you have an agreed amount and have not been paid in a year, fifteen days doesn’t seem to make much of a difference.

  • Allen E Carter

    Farmers Insurance don’t even pay after 40+ years , full replacement policy

  • jack

    On the coast in Mississippi, I’ve heard that Lloyd’s is a little known, cost-saving option to the dreaded Wind $$$ Pool scam. Does anyone know how feasible that is? Based on the above, it makes me a little hesitant, even though I got a Lloyd’s quote from an independent agent that would save me $1,000 a year and a 2% vs 5% deductible.

  • Mike Frankenbush

    Lloyds will try everything and anything not to pay any and all damages they agreed to in the policy. We are going to court with them soon.