Consumers Urge D.C. Council to Make Insurers Accountable In Court For Unfairly Delaying,...

Consumers Urge D.C. Council to Make Insurers Accountable In Court For Unfairly
Delaying, Denying Insurance Claims

WASHINGTON, June 26 /PRNewswire-USNewswire/ -- Insurance policyholders whose
legitimate insurance claims were low-balled, delayed or denied by their
insurance companies testified before the D.C. Council yesterday in support of
legislation that would allow consumers to hold their insurer accountable in
court.

Consumer Watchdog joined policyholders, advocacy organizations and attorneys
for insurance consumers to call on the committee on Public Services and
Consumer Affairs to forward legislation swiftly to the full council.

Under current District law, individual consumers cannot take their insurer to
court for failing to fairly pay a claim. The lack of legal accountability
gives insurance companies a financial incentive to make unfairly low
settlement offers, and intentionally delay or deny legitimate claims, because
they can only be required to pay policyholders the original value of the
claim.

"I have to pay my premium on time and in full and my insurer should have the
same responsibility. Instead, District law lets insurance companies off the
hook for unfairly low-balling claims, dragging their feet on payment, or
denying a legitimate claim altogether. The law must change to protect
consumers from those insurers who otherwise may be more focused on profits
than policyholders," said Carmen Balber, Washington, D.C. director for the
nonprofit Consumer Watchdog.

Washington, D.C. auto insurance premiums were the highest in the nation in
2007. The District was the 2nd-most profitable jurisdiction in the nation
(second only to Hawaii), with average profits of 14.9% between 1997 and 2006.
(See the April 2008 study by the Consumer Federation of America:
http://www.consumerfed.org/pdfs/state_auto_insurance_report.pdf)

"As policymakers whose job it is to protect District consumers, you can be
secure in the knowledge that insurers are making high enough profits and
collecting enough in premiums from District drivers to have plenty of room to
pay claims more fairly without an increase in premiums," Balber testified on
Thursday.

Consumer Watchdog has studied the effects of consumer access to the courts on
auto insurance claim settlements and frequency. A 1988 court ruling in
California changed that state's law and provided a unique opportunity to study
the impact on claims payment of consumers' access to the courts before and
after that right was eliminated. The study examined automobile insurance claim
trends over the 10-year period following the change in law and concluded that,
during the period after motorists lost recourse to the courts, claim
settlements were significantly reduced in value and in frequency, and profits
for insurers increased.

Download Consumer Watchdog's letter to the Committee here:
http://www.consumerwatchdog.org/resources/LtrDCBadFaith6-3-09.pdf

Download the study, "The Low-Balling of the California Auto Insurance Claim,"
at: http://www.consumerwatchdog.org/documents/1743.pdf

Consumer Watchdog is a nonprofit, nonpartisan advocacy organization with
offices in Washington, D.C. and Los Angeles, CA. Find us on the web at:
http://www.consumerwatchdog.org

SOURCE Consumer Watchdog

Carmen Balber of Consumer Watchdog, +1-202-629-3043