Talking points for phone calls on NJ Bad Faith legislation

 
 

If you are asked about the $$…

A study by the independent actuarial firm, Milliman, concluded the potential premium increases for all lines of insurance if the bill is to become law:

  • Premiums for all property-casualty insurance policyholders could increase by $2.8 billion in New Jersey

  • Medical malpractice and commercial liability insurance rates could increase by 21%

  • Bodily injury auto liability rates for commercial and personal policies could increase by as much as 49%

  • Homeowners insurance rates could increase by 17%

  • Greater incentives for insurance fraud

  • Higher premium rates could result in reduced affordable options for consumers

Conversation points:

  • Insurance rates are stable and competitive. I can shop and find the best coverage for a reasonable price.

  • Insurance is a highly regulated industry, which is why it should be the job of the regulator to police insurance company trade practices and not create a system of regulation through litigation.

  • Mandated Auto Insurance Coverages may increase 32-49%, Doctors will see a 21% increase in Medical Liability Coverage, Businesses may see a similar increase in the cost to protect their assets, and homeowners insurance may increase by 17%.

  • The doors to the courthouse already are wide open for consumers who can show recklessness, malice, or a carrier's failure to act in good faith. What this legislation does is make a simple, single disagreement or mistake eligible for attorney's fees and triple the amount of damages that the claimant would otherwise be entitled to. This will open the floodgates for lawsuits and force unnecessarily high settlements.

  • Do not vote for a legislation that hurts all consumers; vote no on Assembly Bill 4293.

Additional information for handling key questions:

  • "Insurance law is too complex, forcing people to hire an attorney to fight the insurer, so why shouldn't they be allowed to collect more if they have to fight?"-Case law in New Jersey gives people the right to sue for "consequential damages" if they prove an insurance company acted in Bad Faith. The State courts have clearly ruled that an insured needs to establish a pattern of bad faith practice by the insurance company, NOT just make a simple mistake. This bill allows for any "unreasonable" delay or denial as a bad faith action, a sweeping change to the law that will open the floodgates for litigation.

  • "Other than cost, what else will this bill do to harm consumers?"-It will be a field day for insurance fraudsters. It discourages the investigation of insurance fraud - something we all pay for - by threatening new lawsuits for "delay". Any criminal filing a fraudulent claim would now have a new tool to discourage being investigated - just file a lawsuit and make it too risky, or costly, for the insurance company to determine whether the claim was legitimate.

  • "Other state's protect consumers with these types of laws, why can't we?"-Other states are actually moving in the opposite direction, realizing that such allowances for nuisance lawsuits negatively impacted their entire insurance market. California ended their law after a decade of higher premiums due to litigation settlements, attorney's fees and fraud. West Virginia also reversed their attorney- centric bad faith laws and saw the market respond by consumers experiencing a $200 million savings in the first 5 years.

  • "Is it only consumers that lose?"-No, medical providers will face up to 21% increases in Medical Malpractice Insurance, businesses also will see steep increases in their commercial liability policies. The only real winners in this legislation are plaintiff attorneys.

  • "But what about Superstorm Sandy, there are still people who haven't settled their claims?"-The fact is that 6 months after Superstorm Sandy the New Jersey insurance market settled 95% of all cases, with the vast majority of those closed in the first 30 days. Given the millions of claims from a single catastrophe, that seems like a reasonably Good Faith effort.