Michigan lawmakers are considering making it easier for trial attorneys to sue insurance companies and win. Senate Bill 329 (and its copy in the House, House Bill 4681) would create a host of new demands on insurance companies — excluding health insurers — for how they process and pay claims. This bill would provide new targets for trial lawyers, as they’ll have more options to allege an insurer did something wrong. As a result, insurance products, such as life, auto, property, workers’ compensation and liability, will be harder to afford.
SB 329 rests on the assumption that insurance companies routinely cheat their customers out of their rightfully earned benefits. But proponents of the bill have yet to offer any specific evidence to suggest there’s a problem that needs fixing. The best the state association for trial attorneys can come up is to accuse the whole insurance industry of prioritizing profits over policyholders.
The bill piles on new “duties and responsibilities” for insurers, in addition to the ones already in law. It relies on subjective terms that expand the possibilities for trial attorneys to file and win lawsuits. For instance, SB 329 would require companies to “exercise good faith and fair dealing,” “establish and maintain reasonable written standards,” “give equal consideration to the interests of the policyholder and claimant,” “investigate and evaluate a claim … in an objective manner” and “give all reasonably benefit of the doubt to the claimant.” There are dozens of other loosely worded demands throughout the bill.
SB 329 will ultimately force Michigan families and businesses to pay more for insurance. The bill would significantly increase insurers’ risk of being sued and having to pay legal fees and damages. These additional costs will be passed on to consumers in the form of higher premiums. Businesses, too, will face higher premiums, and these will be passed on to their customers through increased prices. In short, we’ll all pay a little more so that trial attorneys and their clients can enjoy a legal playing field heavily tilted in their favor.
The Mackinac Center signed a letter with a coalition of organizations in opposition to SB 329. We are joined by several associations representing insurance companies, but also by home builders, manufacturers and Uber, who all recognize the negative impact artificially high insurance premiums will have on their industries.
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