R-67 evens playing field for insurance customers

Put aside the avalanche of misleading advertisements from both sides in the Referendum 67 campaign and ask this simple question:

Who has the upper hand now when a customer in Washington believes he or she has been unfairly denied payment of an insurance claim?

The answer is that insurance companies, with deeper pockets and plenty of lawyers, have the advantage. Under Washington laws, the legal playing field tilts in favor of insurers.

Referendum 67 would uphold a new state law that aims to correct that imbalance. It would discourage insurers from deliberately making it difficult for policyholders to obtain full and timely payment of legitimate claims.

Simply put, Referendum 67 is about fairness, and voters should approve it.

Referendum 67 is on the ballot because the insurance industry wants to kill a measure, approved by the 2007 Legislature, that allows consumers to sue for triple damages when an insurer “unreasonably” denies a legitimate claim. Voting “yes” on R-67 is a vote to keep the new law.

As might be expected, the state’s trial lawyers are spending heavily to back the measure, and insurers, including big, out-of-state companies, are spending millions to defeat it. Business groups oppose the measure as well, fearing that a new flood of lawsuits will drive up insurance costs.

Referendum 67 should not be considered an indictment of the entire insurance industry. But some companies don’t always play fair. Because it is costly and time-consuming for an unhappy customer to go to court, less-honorable companies have an incentive to deny claims or pay less than full value.

The consumer’s ability to seek triple damages evens the odds under the new law. Triple damages can be awarded by a judge only when an insurer has been found to have acted unreasonably in denying a claim. Judges, not juries, decide whether to award triple damages. “Unreasonable conduct” is a well-defined standard in Washington law.

If voters uphold the new law, more lawsuits will undoubtedly be filed against insurers. But insurers who take pains to treat customers fairly will see little damage to their bottom lines.

State Insurance Commissioner Mike Kreidler, a low-key regulator who avoids grandstanding on insurance issues, endorses Referendum 67. Although his office can take complaints, he cannot represent consumers in claims disputes. And the complaints his office sees each year are only “the tip of the iceberg,” he believes.

The triple damages allowed by Referendum 67 are a far cry from the runaway punitive damages that insurers and businesses fear so much; punitive damages remain forbidden by Washington law.

Let the insurers and trial lawyers demonize each other. All Washington insurance policyholders want is fairness in handling their claims. Referendum 67 is a reasonable way to promote it.