The Impact of First-Party Bad-Faith Legislation on Key Insurance Claim Trends in Washington State

Wednesday, March 30, 2011
According to a new study from the Insurance Research Council (IRC), evidence suggests that legislation adopted by the Washington State Legislature in 2007 and approved in a statewide voter referendum may have caused an increase in homeowners insurance claim costs in the state. It is estimated that claim costs were as much as $190 million greater than they otherwise would have been in the two-year period following the law’s enactment. The Insurance Fair Conduct Act, commonly referred to as R-67, eased restrictions for aggrieved insurance claimants filing lawsuits alleging bad faith against their own insurance companies, and authorized the payment of virtually unlimited punitive damages to bad-faith claimants, in addition to the payment of actual damages, attorneys’ fees, and court costs.

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