United Insurers recently issued an important press release, Whistleblower Raises Alarm About Unfair Insurance Practices: Oregon Consumers Need Stronger Legal Protection. While the entire press release is important, one particular sentence stood out:
Under current Oregon law, it is not feasible for the average citizen or small business to hire an attorney and file a lawsuit to challenge unfair treatment by an insurance company.
If there is no liability in the law for breaching legal obligations that harm others, the wrongdoers will simply continue to act unlawfully. If we don’t have laws with consequences, laws are meaningless.
The press release provides some examples of illegal behavior by insurance companies. But the conclusion is significant:
An insured person or business that suffers a loss after purchasing insurance to protect its assets is entitled to full compensation in accordance with the terms of the policy and applicable law. When you pay premiums for insurance, you pay for coverage and fair and reasonable claims handling. A person does not need to sue and pay a professional in addition to collecting the debt owed on the loss. This is commercial justice, common sense and the basis of a healthy compensation system.
But given the ever-present temptation for insurers to slow payouts, underpay and intimidate policyholders into not paying in full and on time, the law should provide for adequate remedies, penalties and awards.
For the benefit of Oregon residents and communities, state law must be strengthened to prevent insurers from unfairly underpaying. As long as insurance companies face little negative consequences for delaying and improperly limiting payouts, it will remain in their financial interest.
The problem with bad faith laws in most states is that either there is no bad faith cause of action, or the standard for proving bad faith is so high that virtually no bad faith damages of any significance are recoverable. This scenario gives rise to illegal behavior by insurers. The insurance industry hates liability, and a private right of action exposes their wrongdoings publicly.
I applaud United Policyholders for bringing public attention to the problem of insurance claims in Oregon and other parts of the country. Amy Bach and United Insurer staff involved in advocating and drafting laws to support policyholders across the country. They deserve our support.
Thought for the day
Responsibility breeds responsiveness.
— Stephen Covey