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S1392.......................................by COMMERCE AND HUMAN RESOURCES INSURERS - UNFAIR CLAIMS PRACTICE - Amends existing law to define an unfair claims practice for an insurer to increase premiums or refuse to renew a policy for a claim which resulted from an action where the insured was not at fault and to provide a penalty. 02/04 Senate intro - 1st rdg - to printing 02/05 Rpt prt - to Com/HuRes
S1392|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE SENATE SENATE BILL NO. 1392 BY COMMERCE AND HUMAN RESOURCES COMMITTEE 1 AN ACT 2 RELATING TO INSURANCE PRACTICES; AMENDING SECTION 41-1329, IDAHO CODE, TO 3 DEFINE AN UNFAIR CLAIM PRACTICE CONCERNING A CLAIM WHEN THE INSURED WAS 4 FAULTLESS; AND AMENDING SECTION 41-1329A, IDAHO CODE, TO PROVIDE A PRI- 5 VATE RIGHT OF ACTION FOR DAMAGES FOR INSURED FOR UNFAIR CLAIMS PRACTICES. 6 Be It Enacted by the Legislature of the State of Idaho: 7 SECTION 1. That Section 41-1329, Idaho Code, be, and the same is hereby 8 amended to read as follows: 9 41-1329. UNFAIR CLAIM SETTLEMENT PRACTICES. Pursuant to section 41-1302, 10 Idaho Code, committing or performing any of the following acts or omissions 11 intentionally, or with such frequency as to indicate a general business prac- 12 tice shall be deemed to be an unfair method of competition or an unfair or 13 deceptive act or practice in the business of insurance: 14 (1) Misrepresenting pertinent facts or insurance policy provisions relat- 15 ing to coverages at issue; 16 (2) Failing to acknowledge and act reasonably promptly upon communica- 17 tions with respect to claims arising under insurance policies; 18 (3) Failing to adopt and implement reasonable standards for the prompt 19 investigation of claims arising under insurance policies; 20 (4) Refusing to pay claims without conducting a reasonable investigation 21 based upon all available information; 22 (5) Failing to affirm or deny coverage of claims within a reasonable time 23 after proof of loss statements have been completed; 24 (6) Not attempting in good faith to effectuate prompt, fair and equitable 25 settlements of claims in which liability has become reasonably clear; 26 (7) Compelling insureds to institute litigation to recover amounts due 27 under an insurance policy by offering substantially less than the amounts 28 ultimately recovered in actions brought by such insureds; 29 (8) Attempting to settle a claim for less than the amount to which a rea- 30 sonable man would have believed he was entitled by reference to written or 31 printed advertising material accompanying or made part of an application; 32 (9) Attempting to settle claims on the basis of an application which was 33 altered without notice to, or knowledge or consent of the insured; 34 (10) Making claims payments to insureds or beneficiaries not accompanied 35 by a statement setting forth the coverage under which the payments are being 36 made; 37 (11) Making known to insureds or claimants a policy of appealing from 38 arbitration awards in favor of insureds or claimants for the purpose of com- 39 pelling them to accept settlements or compromises less than the amount awarded 40 in arbitration; 41 (12) Delaying the investigation or payment of claims by requiring an 42 insured, claimant, or the physician of either to submit a preliminary claim 43 report and then requiring the subsequent submission of formal proof of loss 2 1 forms, both of which submissions contain substantially the same information; 2 (13) Failing to promptly settle claims, where liability has become reason- 3 ably clear, under one portion of the insurance policy coverage in order to 4 influence settlements under other portions of the insurance policy coverage; 5 or 6 (14) Failing to promptly provide a reasonable explanation of the basis in 7 the insurance policy in relation to the facts or applicable law for denial of 8 a claim or for the offer of a compromise settlement. 9 (15) An insurer shall not cancel, refuse to renew or increase the 10 premium for renewal of an individual policy of casualty or property insurance 11 as a result of any claims made under the policy with respect to which the 12 insured was entirely faultless. 13 SECTION 2. That Section 41-1329A, Idaho Code, be, and the same is hereby 14 amended to read as follows: 15 41-1329A. UNFAIR CLAIMS SETTLEMENT PRACTICES -- PENALTY. (1) 16 The director, if he finds after a hearing, that an insurer has vio- 17 lated the provisions of section 41-1329, Idaho Code, may, in his discretion, 18 impose an administrative penalty not to exceed ten thousand dollars ($10,000) 19 to be deposited by the director as provided in section 41-406, Idaho Code, and 20 may, in addition to the fine, or in the alternative to the fine, refuse to 21 continue or suspend or revoke an insurer's certificate of authority. 22 (2) An insured shall have a private right of action for damages for 23 violation of the provisions of section 41-1329, Idaho Code.
STATEMENT OF PURPOSE
RS 07803
This legislation makes it an unfair claims practice to cancel
or raise premiums because of claims for which the insured is not at
fault. The concept of insurance is that it spreads risk. There is no
justification for an insurance company canceling or increasing rates
due to claims made when its customer was not at fault.
The legislation also allows for individuals to file suit for
unfair claims practices as defined by ยง41-1329, Idaho Code. The Idaho
Supreme Court has held in White v. 112 Idaho 94, 730 1014 (1986),
that there is no private right of action for unfair claims practices.
This legislation would override that decision.
FISCAL NOTE
None.
CONTACT: Kay Shields, Executive Director
David E. Kerrick, Legislative Affairs Counsel
Idaho Trial Lawyers Association
P. O. Box 1777
Boise, ID 83707
iita@primenet.com
(208) 345-1890
(208) 345-1894 (fax)
STATEMENT OF PURPOSE,/FISCAL NOTE Bill No S1392