Washington Democratic Gov. Christine Gregoire signed legislation yesterday that would make it easier to convict insurers of bad faith and impose triple damages.

Her signature came despite pleas from insurance groups who argue that the measure will spur unnecessary lawsuits.

The American Insurance Association, the National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America had all urged the Democratic chief executive to veto SB 5726, the Insurance Fair Conduct Act.

The measure passed the Democratic-controlled House and Senate, mostly along party lines, earlier this year.

"SB 5726 will line the pockets of plaintiff trial lawyers with gold at the expense of the insurance consumer," complained Christian John Rataj, NAMIC Western Region State Affairs Manager.

The legislation establishes a statutory right to sue an insurer for bad faith and sets what insurance officials claim is the lowest threshold for conduct an insurer must engage in to trigger not only a suit but treble damages, which in the state is akin to punitive damages.

Kenton Brine, PCI NW Regional Manager, said, "By setting the nation's lowest threshold for allowing punitive lawsuits against insurers for even minor or accidental claims-handling mistakes, SB 5726 will allow virtually every insurance claim, regardless of merit, to become a 'bad faith' lawsuit--triggering access to awards totaling three times actual damages."

In addition, the new law lowers the burden of evidence the plaintiff's must show from "clear and convincing" to a "preponderance" of the evidence.

"The governor's signing of this legislation is especially perplexing, given her stated priority of making Washington a more friendly state in which to do business," said Ken Gibson, AIA vice president, Western Region.

Special Reports /

Wash. Gov. Signs Insurance Fair Conduct Act

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