Montana Legislature Defeats ‘Bad Faith’ Legislation

March 30, 2009

Montana legislators recently defeated House Bill 345, “An act revising the law governing the damages that may be awarded because of an insurance company’s violation of certain prohibited insurance claim settlement practices.”

According to the bill text, “Montana law has traditionally sought to protect insurance consumers from harmful claims settlement practices used by some insurance companies.” The state Legislature has enacted statutes to hold an insurance company accountable if the company fails to properly investigate a claim or adjust and settle a claim in good faith, and “it is the intent of the Legislature to authorize damages for all detriment, including attorney fees, caused when an insurance company engages in certain prohibited insurance claim settlement practices.” In the past, the Montana Supreme Court has denied claims for attorney fees because they were not specifically provided for by the Legislature, the bill text explains.

The Property Casualty Insurers Association of America expressed opposition to the bill, and applauded its defeat.

“PCI strongly opposed this bill, and thevote was a win for Montana consumers,” said Kelly Campbell, PCI regional manager. “Montana already has unfair claims handling laws and regulations on the books, and the competitive nature of the insurance industry places strong pressure on insurers to deliver good customer service when a claim must be settled. This was an unnecessary amendment that would have done nothing to help consumers.”

Campbell said the bill, if passed, would have allowed trial lawyers to expand their abiality to bring lawsuits and absorb more fees on disputed insurance claims, the price of which ultimately would have been passed onto consumers.

The state Senate Business and Labor Committee earlier had voted down the measure by a 10-1 margin.

Sources: Montana Legislature, PCI

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