Voters should reject insurers' scare tactics
Tuesday, October 23, 2007 7:47 AM PDT
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E-mail this articleInsurance companies and trial lawyers are trading blows over a new state law that would allow consumers to sue their insurers for up to three times actual damages in what may be the most expensive campaign in state history. Big insurance companies raised around $9 million to get out the "no" vote on Referendum 67, repealing the law. Trial lawyers reportedly anted up about $1.4 million for their "Approve Referendum 67" campaign.
Washington voters may experience a little vertigo when attempting to sort through both sides' claims and counter claims. Ten million-plus dollars can generate an awful lot of spin. Even without the spinning, this ballot measure is no easy call. Both opponents and proponents of the state's Insurance Fair Conduct Act raise valid points.
The law is imperfect. Yet, at the same time, it gives consumers a needed protection against insurance companies that would unreasonably delay or deny legitimate claims. On balance, we think this protection is worth keeping and urge voters to approve Referendum 67.
Our support for the referendum is influenced in part by Gov. Chris Gregoire's pledge last spring to revisit the law next year and make it more acceptable to insurers. More specifically, Gregoire proposed to consider a higher legal threshold for the conduct that could result in tripling damages and capping the total amount of damages. The law doesn't apply to health insurers.
We believe the insurance companies' chief concern with the law -- what it might cost them -- can be addressed without scraping this hard-won consumer protection. Moreover, we agree with state Insurance Commissioner Mike Kreidler, who has pointed out that the only insurers who have reason to worry about their costs rising are those who unfairly deny claims.
Kreidler fully supports this law. In a letter e-mailed to newspapers earlier this month, he wrote that his office receives thousands of complaints and helps consumers recover millions of dollars in legitimate claims annually. Kreidler says these complaints represent just "a tip of the iceberg." And he adds that his office is limited in what it can do. The insurance commissioner, for example, cannot compel payment of a claim.
Consumers, of course, can take their insurer to court if they believe a claim has been unfairly denied. But should they win, the insurance company is only required to pay the claim. The consumer, Kreidler noted, is stuck with legal costs. That's not fair. There ought to be consequences for delaying or denying legitimate claims -- something to provide those few insurers that would treat their customers unfairly an incentive to do the right thing.
The Insurance Fair Conduct Act would do that by allowing a judge to order insurers who unreasonably deny claims to pay up to three times actual damages and legal costs. Voters should allow this law to take effect by voting "yes" on Referendum 67.
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