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Referendum Measure No. 67

Wednesday, October 24, 2007

It has been claimed--no pun intended--that this referendum would create an environment where every person who thought he got a bad shake from his insurance company would sue them for triple damages because he felt his settlement to be "unfair". I'm respectfully going to disagree with this assertion. I agree that the fairness doctrine is one that should be avoided at all costs, but in this instance, I think the label has been misapplied. Much like the SEC oversees stock trading, this referendum only allows the insurance commissioner the authority to promulgate rules for the conduct of insurance providers. Who determines what is "fair" in the realm of insurance providers? He does.

There are two parts to this referendum. Part one allows the insurance commissioner to make rules concerning how insurance companies conduct business in this state. Part two removes from the insurance companies the ability to deny claims without reason. The language* of the measure specifically uses the word "unreasonable" to describe what will not be allowed. To me, unreasonable, as used in the new code, means without reason.

*(7) An insurer engaged in the business of insurance may not unreasonably deny a claim for coverage or payment of benefits to any first party claimant. (Emphasis added)

I've talked to several people recently that have been denied their claims (one individual who's house burned down, another who was physically injured, to name a few) for no apparent reason. These poor people have been battling their insurance companies for well over a year just to get them into court where they can argue their cases before a judge. These people are who I believe the drafters of this measure were hoping to protect by legally expediting the process.

If a judge determines that the insurance company has denied a claim without reason they can then be penalized for up to three times the amount of the claimed damages. I really don't see where the claims for abuse are justified. Will people bring suit where they have no standing (claiming their insurance companies denied their claims without reason)? Sure, but I think their claims will be discovered to be untrue almost immediately and they will have to pay for all attorney's and court costs themselves. I think that that, in and of itself, would prohibit frivolous claims.

I feel pretty good with the way this measure is structured and will be voting for it. You can view the complete text of Referendum 67
here (.pdf document).


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