Michigan Bill Targets “Bad Faith” Insurance Claim Denials

As regular readers of ThePopTort are well aware, not to mention those who suffered terrible losses in the wake of Hurricane Katrina, insurance companies don’t always behave like the “good neighbors” their ads often portray them to be.  That’s why last week, Michigan House Democrats introduced a 12-bill package aimed at making sure the state’s insurance companies are held accountable when they “drag their feet” paying legitimate claims.

Jo Anne Katzman, a former Allstate employee who handled homeowner claims, explained exactly why she thought the legislation was necessary.  According to Katzman, who left her job in 2006 because she “just couldn’t do it anymore,” the situation for Allstate’s customers was decidedly grim. 

Katzman reported that she and her colleagues were “routinely told to deny claims or, if the Michigan office had spent too much in one month, delay writing checks to policy holders until the following month.”  Workers who complied with such policies were “rewarded with desk refrigerators and clothing,” said Katzman.

“No one should have their life ruined because an insurance company won’t do what it promised,” said Rep. Barb Byrum (D-Onondaga), who chairs the House Insurance Committee.

Michigan is currently “one of only four states without significant legal remedies” to protect consumers in “bad faith” insurance cases.

Allstate, by the way, says, "Our handling of claims is sound, compliant with state law and in a timely manner."  Sounds like some improvement in state law is definitely in order.

Meanwhile, in another “Great Moment in State Insurance Legislation” (hat tip, Bob Hunter), the insurance industry’s lobby group, the American Insurance Association, is supporting a resolution from the ultra conservative American Legislative Exchange Council (ALEC) that opposes these kinds of “bad faith” laws, claiming they interfere with the “policyholder-insurer relationship.”  And I guess not paying claims doesn’t(?).  We’re just sayin’...

Comments

[Insurance Bad Faith]

nice blog.... looking forward for the next one....