Information
April 18, 2008:
The Insurance Fair Conduct Act (IFCA) was passed by the Washington Legislature, and signed by the Governor last year. The insurance industry raised enough signatures to put it on the ballot for a Referendum vote (Referendum 67) on last November’s ballot. The IFCA was approved by the voters in that election by a 57% to 43% margin. This happened despite the advertising campaign financed by the insurance industry. The Reject 67 campaign funded virtually 100% by insurance companies under the name “Consumers Against Higher Insurance Rates” raised and spent nearly $12 million, four times what the supporters of the law raised. While the insurance industry tried mightily to frame the vote as being for or against trial lawyers, the law is a simple and fair insurance consumer protection law.
The IFCA was effective December 6, 2007. It provides legal remedies for policyholders, including the ability to seek punitive damages in court if their claims are unreasonably denied by their own insurance companies or if their own insurance company violates particular regulations governing unfair claims settlement practices. For example, insurance companies must timely acknowledge their policyholders’ letters and phone calls about their claims, must promptly investigate claims, and must promptly and fairly settle valid claims. This new law is a tool that will empower insurance consumers and enable them to stand a better chance to get treated fairly and reasonably by their own insurance company.
Consumers should be aware that the law applies only to claims made by insured people to their own insurance companies. It does not apply to claims made by one person to someone else’s insurance company. For example, if a person has been in a car accident, this law applies to a claim made by an insured under his own policy to his own insurance company. It does not apply to someone making a claim against another person’s insurance company. One area where this new law will help consumers who are injured in automobile accidents is in the area of PIP (Personal Injury Protection) coverage. PIP is no fault medical insurance coverage that must be offered by automobile insurance companies to its policy holders when they first purchase automobile insurance. I recommend that all persons purchase PIP coverage if at all possible. The same holds true for uninsured motorist (UM) coverage which covers you if you are hit by a negligent driver who does not have liability insurance coverage or does not have enough coverage. Both PIP and UM coverage are provided by your own insurance company and the protections of the Insurance Fair Conduct Act apply. The IFCA does not apply to health/medical insurance.
Under the law, policyholders who wish to sue their insurance company must mail written notice of the potential lawsuit to the insurance company and to the Office of the Insurance Commissioner at least 20 days before the lawsuit is to be filed. You can find more information and a form of written notice at http://www.insurance.wa.gov/index.asp the Washington State Office of the Insurance Commissioner’s website. In my opinion, the role of Mike Kreidler, our Insurance Commissioner in debunking some of the lies put forth in opposition to the IFCA was quite instrumental in the Approve side winning. I hope the citizens of Washington will support him when he comes up for re-election as I am sure he will be on the insurer companies’ 'hit list'.
The IFCA is set out below. The Act refers to various sections of the Washington Administrative Code (WAC) that define unfair claim settlement practices. The WAC sections referred to can be found at: http://apps.leg.wa.gov/WAC/default.aspx?cite=284-30.
RCW 48.30.015 [The Insurance Fair Conduct Act]
Unreasonable denial of a claim for coverage or payment of benefits.
(1) Any first party claimant to a policy of insurance who is unreasonably denied a claim for coverage or payment of benefits by an insurer may bring an action in the superior court of this state to recover the actual damages sustained, together with the costs of the action, including reasonable attorneys' fees and litigation costs, as set forth in subsection (3) of this section.
(2) The superior court may, after finding that an insurer has acted unreasonably in denying a claim for coverage or payment of benefits or has violated a rule in subsection (5) of this section, increase the total award of damages to an amount not to exceed three times the actual damages.
(3) The superior court shall, after a finding of unreasonable denial of a claim for coverage or payment of benefits, or after a finding of a violation of a rule in subsection (5) of this section, award reasonable attorneys' fees and actual and statutory litigation costs, including expert witness fees, to the first party claimant of an insurance contract who is the prevailing party in such an action.
(4) "First party claimant" means an individual, corporation, association, partnership, or other legal entity asserting a right to payment as a covered person under an insurance policy or insurance contract arising out of the occurrence of the contingency or loss covered by such a policy or contract.
(5) A violation of any of the following is a violation for the purposes of subsections (2) and (3) of this section:
(a) WAC 284-30-330, captioned "specific unfair claims settlement practices defined";
(b) WAC 284-30-350, captioned "misrepresentation of policy provisions";
(c) WAC 284-30-360, captioned "failure to acknowledge pertinent communications";
(d) WAC 284-30-370, captioned "standards for prompt investigation of claims";
(e) WAC 284-30-380, captioned "standards for prompt, fair and equitable settlements applicable to all insurers"; or
(f) An unfair claims settlement practice rule adopted under RCW 48.30.010 by the insurance commissioner intending to implement this section. The rule must be codified in chapter 284-30 of the Washington Administrative Code.
(6) This section does not limit a court's existing ability to make any other determination regarding an action for an unfair or deceptive practice of an insurer or provide for any other remedy that is available at law.
(7) This section does not apply to a health plan offered by a health carrier. "Health plan" has the same meaning as in RCW 48.43.005. "Health carrier" has the same meaning as in RCW 48.43.005.
(8)(a) Twenty days prior to filing an action based on this section, a first party claimant must provide written notice of the basis for the cause of action to the insurer and office of the insurance commissioner. Notice may be provided by regular mail, registered mail, or certified mail with return receipt requested. Proof of notice by mail may be made in the same manner as prescribed by court rule or statute for proof of service by mail. The insurer and insurance commissioner are deemed to have received notice three business days after the notice is mailed.
(b) If the insurer fails to resolve the basis for the action within the twenty-day period after the written notice by the first party claimant, the first party claimant may bring the action without any further notice.
(c) The first party claimant may bring an action after the required period of time in (a) of this subsection has elapsed.
(d) If a written notice of claim is served under (a) of this subsection within the time prescribed for the filing of an action under this section, the statute of limitations for the action is tolled during the twenty-day period of time in (a) of this subsection.
