There are moments when an argument sounds refined at first blush. Then it begins to break down beneath its personal weight. This was my thought whereas listening to Steve Badger elevate the query of whether or not late fee curiosity might legally be claimed by a public adjuster throughout his debate with Rene Sigman at TAPIA’s Annual Conference yesterday.
Badger made the suggestion that calculating statutory curiosity on a late-paid declare might represent the apply of legislation. The implication is that adjusters for insurers or policyholders shouldn’t calculate immediate fee curiosity with out involving authorized counsel.
My opinion is that the place is not only overstated, it’s misguided.
Beneath Texas Insurance coverage Code Chapter 542, immediate fee curiosity is statutory. When an insurer misses the statutory deadline for fee, curiosity accrues on the statutory charge. It’s not discretionary. It’s not a negotiation tactic. It’s not a foul religion penalty requiring judicial interpretation in each occasion. It’s a compliance course of that insurance coverage firm adjusters must be educated to pay.
The calculation particulars are mechanical. When was discover of the declare acquired? When was fee due beneath the statute? When was fee really made? What’s the statutory charge? Most center faculty youngsters might work out the reply. It’s arithmetic and never authorized.
Insurance coverage adjusters carry out statutory and policy-driven calculations day-after-day. They calculate depreciation. They apply deductibles. They consider coinsurance penalties. They compute alternative price holdbacks. They assess ordinance and legislation limitations. Every of these determinations flows from coverage language layered over statutory necessities and customary legislation, which they have to know to do their job.
Nobody argues that making use of a deductible is the apply of legislation. Nobody means that calculating overhead and revenue requires a bar license. But someway, in terms of statutory curiosity, Badger says that arithmetic transforms into authorized illustration.
Are there situations the place authorized enter is prudent? In fact. If there are disputed triggering dates, tolling arguments, competing protection positions, or difficult sequences of partial funds, authorized evaluation could also be warranted. These are edge circumstances. However they don’t seem to be each case.
If an insurer adopts the operational posture that “we can’t pay statutory curiosity with out legal professional assessment,” two predictable penalties observe. First, fee is delayed additional. Second, the insurer will increase its personal publicity beneath the very statute designed to incentivize immediate compliance.
Texas Chapter 542 was enacted to discourage delay. It creates a monetary consequence for lacking deadlines. Including an legal professional to be a checkpoint to routine calculations undercuts the statute’s goal.
There’s additionally an uncomfortable inconsistency embedded on this debate. If calculating statutory curiosity is supposedly the apply of legislation when a public adjuster does it, however insurers declare their very own adjusters can’t calculate it with out attorneys, what precisely are we saying? Is that this a routine compliance calculation or a fancy authorized train? It can’t be each, relying on who’s holding the calculator.
When insurance coverage firm counsel means that statutory curiosity requires legal professional oversight, it implies considered one of three issues. First, the statute is just too difficult for educated adjusters to find out with no authorized opinion. Second, the provider fears publicity in routine compliance. Third, the authorized assessment capabilities as a procedural buffer in opposition to late curiosity fee. None of these messages conjures up public confidence within the insurance coverage firm’s compliance with late fee curiosity funds.
Statutory curiosity isn’t a courtesy. It’s not a bonus. It’s the legislatively imposed consequence of delay. Beneath Texas legislation, when a declare is paid late, curiosity accrues. The cleanest and {most professional} response is a simple calculation of the quantity and its immediate fee. Then, the file must be closed.
If it actually takes a lawyer to do this math each time, then the difficulty isn’t the statute. It’s the authorized system and attorneys attempting to overstate what it means to apply legislation.
Thought For The Day
“Simplicity is the final word sophistication.”
— Leonardo da Vinci