SENATE BILL REPORT

SB 5507

BYSenator Bender

Declaring certain acts to be unfair or deceptive acts or practices under the insurance code.

Senate Committee on Financial Institutions

Senate Hearing Date(s):February 12, 1987; February 20, 1987

Majority Report:  That Substitute Senate Bill No. 5507 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Moore, Chairman; Bender, Vice Chairman; Bottiger, Fleming, McDermott, Metcalf, von Reichbauer.

Minority Report:  Do not pass.

      Signed by Senator Pullen.

Senate Staff:Phil Sorensen (786-7470)

                  February 20, 1987

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS, FEBRUARY 20, 1987

BACKGROUND:

The insurance title of the Revised Code of Washington includes a chapter dealing specifically with acts by insurers constituting unfair practices and fraud.  Under this chapter, the Commission has jurisdiction to promulgate rules and to enforce penalties against offenders.

A private cause of action for an insured or claimant does not exist under this chapter, but may be brought under the Consumer Protection Act.

SUMMARY:

A private right of action is created for the insured or claimants under the unfair practices and fraud chapter in the Insurance Code.  Failure of an insurer to act in good faith when dealing with an insured or claimant is an unfair or deceptive practice. Specific methods and procedures constituting unfair or deceptive acts are identified.  Additionally, any insured or claimant injured by a deceptive act or practice may have a cause of action in superior court to recover actual damages and the cost of litigation.  The court is given authority to award up to three times the actual damages.

EFFECT OF PROPOSED SUBSTITUTE:

Any insured or claimant injured while pursuing his or her claim, by acts defined in or prohibited by law, has the right to a private cause of action.  The definition of "insured" includes the right to a legal defense under an insurance policy.  The reference to suretyship has been deleted.

Fiscal Note:      none requested

Senate Committee - Testified: Cheryl Hollingsworth, consumer; John Winney, IWAC; Basil Badley, AIA, ACLI, HIAA; Harold Fosso, State Farm; Pat LePley, Washington State Trial Lawyers Association; Doug Bohlke, Contractors Bonding Ins. Co.; Joan Gaumer, Blue Cross; Foster Cronyn, Washington Insurers; John Peterson, Unigard