Box Score On Faith Bills Puts Insurers Ahead, Says PCI

NU Online News Service, April 3, 11:41 a.m. EDT

Bills to ease rules for bringing "bad faith" lawsuits in claim disputes have been introduced in a growing number of state legislatures, but so far insurance interests have been winning the battle to defeat them, an industry trade group reports.

Seventeen bills have been introduced in 15 states, and at this point only 10 measures have survived, according to Rey Becker, vice president for global issues and research at Property Casualty Insurers Association of America (PCI), which is in the forefront of the fight.

"So far, so good," Mr. Becker remarked, but he cautioned that "it aint over till the fat lady sings." The latest success for PCI, he said, was in Oregon where the sponsor withdrew the measure earlier this week.

Mr. Becker said that in tracking bad faith bills this year and last PCI has seen a lot more activity, which he attributes to the election of more Democratic governors and legislators.

Such legislation, he said, is "by and large a high priority of the trial bar," which he noted provides "a large amount of economic support of Democratic candidates."

Such bills that allow for third-party lawsuits, he said, mean "two lawsuits for every accident. That's largely driven by the plaintiff's bar. Not only are they pursuing a claim against the liability insurer for the damages from the auto accident, but they also get a second bite at the apple by alleging bad faith."

He said insurers have been successful in combating such measures because "when we get a chance to educate legislators by explaining the cost involved and the fact that it is duplicative, we're having pretty good luck."

In addition to Oregon, bad faith bills in Iowa, Montana and New Mexico have either been defeated or withdrawn he said.

Currently, among the 10 states where bills are still alive, those of greatest concern to PCI are the District of Columbia, Minnesota and Nevada. "They still have some viability," he said.