Wyoming legislation designed to allow unprecedented insurance-related lawsuits in the state would significantly increase fraud, lawsuits and insurance costs for Wyoming consumers, according to the Property Casualty Insurers Association of America (PCI).
This bill, SB 68 by Sen. Hank Coe, R-Cody, is scheduled to be considered today by the Senate Judiciary Committee.
Kelly Campbell, PCI regional manager, said, “SB 68 would increase claims costs, prompt greater fraud and result in substantially higher liability insurance premiums. As lawsuit volume goes up, costs will go up as well for Wyoming’s courts, taxpayers and public and private liability insurance buyers,” she said.
Campbell explained that the measure would allow insurance claimants who are unhappy with their claim’s handling to file a “second lawsuit” directly against the insurer by alleging a single violation of the state’s Unfair Claims Settlement Practices Act.
Under current Wyoming law, which follows the recommendations of the National Association of Insurance Commissioners, the insurance commissioner’s job is to punish insurers if they engage in patterns of claims misconduct — as opposed to the single acts SB 68 would allow.
“California a number of years ago had a similar litigation law, which led to dramatic increases in lawsuits. Auto liability litigation alone jumped more than 80 percent before the rule was discarded,” Campbell said.
In overturning the law, California’s high court said the statute “may tend to encourage unwarranted settlement demands by claimants, and to coerce inflated settlements by insurers seeking to avoid the cost of a second lawsuit and exposure to a bad faith action.”
Campbell said, “This legislation would come with too high a price for Wyoming consumers.”
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