Declarations

Declarations

Policy talk

“The law holds insurance agents to accurately representing policy provisions and honestly answering consumer questions. Agents who are not trained to act with complete honesty and integrity in their interactions with consumers, or who simply refuse to do so, place themselves and their principals at risk. The law will hold both principal and agent liable for misrepresentations upon which consumers reasonably rely.”

— Utah Supreme Court, commenting on its decision in Youngblood v. Auto-Owners Insurance Co. that an insurance agent’s verbal representations of a policy to an insured may provide insurance coverage beyond the express terms of the insurance policy. The court said estoppel may be applied to modify terms of an insurance policy when (1) an agent makes material misrepresentations to the prospective insured as to the scope of coverage or other important policy benefits, (2) the insured acts with prudence and in reasonable reliance on those misrepresentations and (3) that reliance results in injury to the insured.

Bill leads to “bad faith”

“This so-called Insurance Fair Conduct Act could make Washington among the worst states in the nation for settling insurance claims. Washington statutes provide broader remedies and damages than most states and under SB 5726, virtually every insurance claim holds the potential to become a ‘bad faith’ lawsuit. Insurers are already required by law to act in good faith in the interest of their policyholders, and severe penalties exist for those who do not. Consumers benefit from the reasonable resolution of disputes — not from windfall recoveries, higher insurance costs and higher fees for attorneys.”

— John Eager, senior director, claims for the Property Casualty Insurers Association of America, commenting on Washington senators’ approval of SB 5726, which allows for first-party bad faith lawsuits. The bill increases allowable monetary damages, requires payment of costs and attorneys’ fees, and permits the courts to award triple damages as a punitive measure. It is scheduled to go to Gov. Chris Gregoire for her signature.

Federal help not needed

“Government insurance would displace insurance provided by the private market. For the most part, the national insurance industry is healthy today.”

— Edward Lazear, chairman of the White House Council of Economic Advisers, responding to pleas for a federal disaster plan. Florida Gov. Charlie Crist said a national catastrophe fund would help stabilize an insurance industry that has gone berserk in coastal areas. “Traditional insurance market mechanisms are not adequately managing catastrophic risk,” he said.

Question of ethics

“I really question the ethics of someone who wants to fire us simply because our conclusions don’t match hers.”

— Randy Down, vice president of engineering services for Forensic Analysis & Engineering Corp., in an e-mail dated in Oct. 2005, questioning whether there was an ethical problem with State Farm telling the firm what to put in its reports assessing Hurricane Katrina damage.