NU Online News Service, July 29, 1:50 p.m. EDT

The majority of the American public is not overly supportive oflegislation allowing policyholders to file first-party bad-faithlawsuits, the Insurance Research Council (IRC) said in a newreport.

IRC conducted the study as several states are seeking to enactlegislation that would allow policyholders to file lawsuitsalleging their insurer acted in "bad faith" when settlingclaims.

In addition to authorizing these lawsuits, IRC said some of theproposed legislation would allow courts to impose punitive damagesand other costs against the insurer when such lawsuits aresuccessful.

According to the report, Washington, Maryland and Minnesotarecently enacted laws that allow first-party bad-faithlawsuits.

At least 12 additional states--such as New Jersey andMichigan--as well as the District of Columbia, considered suchlegislation in 2009, the report noted.

IRC's "Public Attitude Monitor 2010: First-Party Bad-FaithLegislation" report found that 26 percent of respondents said thatallowing such lawsuits is a "poor idea," while 31 percent said itis a "fair idea."

In contrast, twenty-two percent said allowing the lawsuits is a"good idea" and twelve percent categorized it as an "excellentidea."

The report noted the similarity between these findings andopinions about third-party lawsuits reported in the IRC's 2000survey, in which 56 percent of respondents said such lawsuits wouldbe a "fair" or "poor" idea.

When asked what the possible effects of allowing first-partybad-faith lawsuits would be, 25 percent of respondents noted"higher insurance costs," 14 percent said "more frivolouslawsuits," and 7 percent said "making insurance companies moreaccountable."

IRC noted that all responses were volunteered, and mainlyreflected whether or not respondents supported legislation forfirst-party bad-faith lawsuits.

In addition, the report found that 71 percent of respondentssaid they are either "not at all willing" or "not very willing" topay more for insurance to allow such lawsuits.

In contrast, 22 percent said they are "somewhat willing" to paymore, while only four percent said they are "very willing."

The study was conducted for the IRC by the market research firmHarris Interactive from December 15, 2009 through January 6, 2010.The firm interviewed 1,614 adults countrywide, age 18 and over.

A public policy paper by the National Association of MutualInsurance Companies states that at least 25 states recognize theright to file a private cause of action alleging bad faith.