Bad faith legislation is not good policy

The National Association of Mutual Insurance Companies (NAMIC) continues to battle bad faith bills nationwide. (ALM Media archives)

When the topic of bad faith legislation arises in the states, the proverbial hair on the back of the neck rises for insurers nationwide.

If a policyholder were to ask why, the answer is simple: Legislation like this does not benefit consumers, nor does it improve insurance regulation. Its solely for the benefit of trial lawyers. It creates a double lawsuit windfall that clogs the courts, keeping meritorious suits from being heard. Such legislation also countermands the authority of state insurance regulation, and instead interjects a litigation shakedown and lottery-style pursuit of jackpots that ultimately hurt policyholders through increased costs and premiums.