Insurance News

NAMIC Applauds Legislator Group Adoption of Bad Faith Resolution

Posted on: September 4, 2009

The National Association of Mutual Insurance Companies (NAMIC) today applauded the American Legislative Exchange Council for adopting a resolution opposing insurance bad faith legislation.

The ?Resolution Opposing Unfair and Unbalanced Insurance ?Bad Faith? Legislation? urges state legislatures to adhere to traditional principles of contract law and oppose legislation designed to:

Create new or expansive private causes of action; Dilute existing standards for bad faith insurance claims handling; and Provide for recovery of new extra-contractual damages, including damages multipliers, punitive damages, and one-way awards of attorneys? fees.

?This resolution will be an effective tool in opposing trial-bar-backed efforts in the states to drastically increase the volume of litigation and expand insurer liability beyond reasonable levels,? commented Paul Tetrault, NAMIC state affairs manager. Tetrault, who serves on ALEC?s Civil Justice Task Force, noted that while bad faith bills are typically described in favorable terms by sponsors, the resolution recognizes that such bills hurt consumers by increasing costs that are ultimately borne by those who purchase insurance.

?The resolution also stresses the way in which the threat of excessive bad faith liability can interfere with the proper functioning of the claims settlement process, hindering insurers? ability to detect fraud, which can result in payment of meritless claims,? Tetrault observed.

There has been a tremendous amount of legislative activity during the past year involving bills that would expand insurer bad faith liability, Tetrault pointed out. ALEC?s resolution notes that bills were introduced this year in Colorado, Connecticut, Florida, Georgia, Iowa, Maine, Montana, New Mexico, Nevada, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, and Washington, D.C.

?Going forward, this resolution will help to show these bills for what they are ? efforts to expand litigation and liability at the expense of consumers,? Tetrault asserted.

© Copyright 2009, National Association of Mutual Insurance Companies (NAMIC).

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