Colorado Defeats Unfair Claims Settlement Practices Bill

April 10, 2009

Colorado lawmakers voted down SB 103, the unfair claims practices act. The legislation was killed in the House Health and Human Services Committee in a 6-5 vote.

The bill, if it had passed, would have “defined as an unfair claim settlement practice and a deceptive act or practice in the business of insurance the practice of providing any pay, salary, reward, bonus, promotion or other financial incentive to any person involved in the review of a claim for benefits or to persons perfoming utilization review, in conneciton, directly or indirectly, with the denial of a claim made by an insured or claiminat or the cancellation of an insurance policy.”

The Property Casualty Insurers Association of America (PCI), said bill would have prohibited insurance companies from giving bonuses and incentives to insurance adjusters and other employees for denying claims.

However, “SB 103 was just an unnecessary bill conceived to advance trial bar interests,” said Kelly Campbell, PCI regional manager, who noted it would have increased litigation and subsequently driven up insurance costs . “Insurance carriers do not financially reward their employees for denying claims. Rather, it’s in insurers’ best interests to deliver good customer service and settle claims fairly.”

In her testimony against the bill, Campbell also highlighted that passage of the legislation would have given attorneys more incentive to pursue frivolous litigation and investigate insurance employee records while making it more difficult for insurance companies to investigate fraudulent claims.

Sources: Colorado Legislature, PCI

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