Insurers and other businesses are spending millions on a referendum to overturn a new Washington law that eases requirements for filing bad faith actions against carriers, a trade group representative said today.

“This is a large-dollar, spirited campaign which is definitely running into the millions,” said Dana Childer a spokesperson for the Des Plaines, Ill.-based Property Casualty Insurers Association of America (PCI).

The business effort far outstrips a countercampaign by attorneys. So far it reports spending only a few hundred thousand.

In addition to PCI, the business coalition supporting the “Reject Referendum 67, Consumers Against Higher Insurance Rates” campaign includes the American Insurance Association and the National Association of Mutual Insurance Companies.

The campaign is an effort to persuade Washington residents to vote against Senate Bill 5726, the Insurance Fair Conduct Act, in the November elections, said PCI spokesperson Kenton Brine.

The bill, signed by Gov. Christine Gregoire in May, establishes a statutory right to sue an insurer for bad faith, sets the lowest threshold for allowing lawsuits against insurers, and allows for plaintiffs to impose triple damages on the insurers, according to PCI.

The legislation makes it easier for “every single insurance claim to be a bad faith,” said Ms. Childer. In her organization's view, SB 5726 also makes Washington among the worst states in the nation for settling insurance claims.

“This law creates an environment in which every insurance claim holds the potential to become a 'bad faith' lawsuit,” said Mr. Brine.

The first phase of the Reject 67 campaign began in May and ended in July. The second phase ends in November, said Ms. Childer.

The campaign surpassed the required 112,440 signatures needed to qualify for a referendum on the ballot, tallying 155,220 signatures in total. Submitted Friday, the signatures are currently being verified by the Secretary of State's Office.

To explore a possible legislative solution to the problems posed for insurers by the law, Gov. Gregoire convened a working group to establish a dialogue between insurers and the Washington State Trial Lawyers Association, but no action was taken on the referendum during those sessions and SB 5726 action will be postponed till the November elections.

The Washington State Trial Lawyers Association has its own campaign, “Approve 67,” a coalition of consumers, seniors, firefighters, labor leaders, small-business owners, progressives, attorneys, families and citizens who want to protect consumers from unfair insurance practices, according to the campaign's official Web site.

The campaign's total contribution has exceeded $200,000, said WSTLA spokesperson Sue Evans.

Referendum 67 establishes an incentive to deal with legitimate claims fairly by letting the court assess penalties if an insurance company illegally denies or delays payment of a claim, according to the campaign Web site.

Special Reports /

Insurers Spend Big In Ballot Battle Over Bad Faith

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