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Insurance companies should play by the same rules

May 8 is an important day in the Oregon legislature: the Senate has a chance to stop the insurance industry’s unfair exemption from the Unlawful Trade Practices Act.

Erik Kancler of Bend posted this at BlueOregon on behalf of the Economic Fairness Oregon.

I encourage you to read it.

Imsurance Companies should play by the same rules as everyone else in Oregon

Original post appears at BlueOregon.com 

Imagine you’ve just purchased a new minivan. Kids are growing up, starting school, and you need a safe way to get everyone around town. Two weeks later the engine blows up and despite purchasing an extended five-year, fifty-thousand mile powertrain warrantee the dealer says tough luck.

Or you’ve recently bought a home only to find out that the roof leaks. To protect your investment you purchase a new 30-year roof and then watch in disbelief as major portions blow off as a result of a product defect. When you complain to the manufacturer, they in turn blow you off.

In cases like these, Oregon consumers can turn to Oregon’s Unlawful Trade Practices Act to seek justice. The UTPA is the backbone of consumer protection in Oregon. It provides consumers and the State Attorney General with the power to challenge companies that fail to deliver on the promises they’ve made and helps to lessen consumer abuse by deterring would-be bad actors.

But if your beef is with an insurance company, you’re out of luck. They can promise the sun, the moon, and the stars, but when they fail to deliver, Oregon law is on their side, not yours.

That’s because unlike the auto dealer or the manufacturer/installer of your roof (or every single other company in every single other industry doing business in Oregon) your insurance company is exempt from the UTPA’s requirements.

This isn’t the case in Washington. Most other states, in fact, include the industry in their unlawful and deceptive practice acts. That the industry presently enjoys such an exemption in Oregon is a direct result of its political influence in Salem. This session alone there more than 50 lobbyists defending the industry’s stance on the issue and opposing Oregon House Bill 3160A, which would add insurance to the State’s UTPA.

That any one industry would be exempted from a regulatory framework as important as the UTPA is unfair. That of all industries it would be the insurance industry – which itself represents an essential backbone of consumer protection – is especially troubling. If anything, given the unique and crucial role insurance plays in people’s lives, and that in many cases we’re actually required by law to purchase it, insurance should be the first industry covered.

In 1994, David Killion’s Warrenton home lost major portions of its roof during a winter storm with winds nearing 90 miles per hour. Afterwards, his insurance company sent out a claims adjuster who offered $3,000 for damage that local contractors estimated at over $20,000. Killion had no choice but to fight.

It took him over four years and considerable expense to get the insurance company to cover the damages. In the meantime, his house began to stink, black mold grew everywhere, his wife developed asthma, and he and his family were too embarrassed to invite friends or family over for get-togethers.

In 2004, a fire devastated Michael Mckeon’s potato packing factory in Merrill – a factory that his family had owned and operated since World War II. His insurance company not only failed to pay but dragged his family’s name through the mud in the process. It took nearly six years to reach a settlement and clear his family’s name, and the business was never able to re-open.

When Portland-based Zidell Industries received a cleanup notice from DEQ related to industrial contamination in 1997, its insurers balked. Eventually vindicated by court victories and settlements with all but the most obstinate of its insurers, Zidell has spent $20 million over multiple decades in an effort to receive coverage.

“If Zidell had been able to assert claims and seek penalties or unfair claim settlement practices, the insurer would have perhaps been compelled to settle the case years ago,” a representative from Zidell recently told the Oregon Legislature.

Among those who testified in support of HB 3160 is former Oregon Governor, Supreme Court Justice, and Insurance Commissioner, Ted Kulongoski:

Years ago, when I served as Oregon’s Insurance Commissioner, I testified against adding insurance companies to the UTPA in a similar piece of legislation. But times have changed—and I have changed my mind. The financial services meltdown in 2007 and the recent recession, which cost many Oregon citizens their jobs, their homes, their retirements, and their futures, must be a wake-up call for public officials to provide greater consumer protection against fraudulent business practices in the financial services markets.

Although the insurance industry disagrees with this perspective, there is simply no good reason, principled, pragmatic, or otherwise, for why the goods and services we purchase and investments we make should be covered by the UTPA but the insurance policies that we purchase to protect those goods, services, and investments should not.

Oregon House Bill 3610A would end the insurance industry’s unfair exemption from the UTPA and provide Oregon consumers and businesses much-needed consumer protection. The Oregon House of Representatives did its job in passing the bill over to the Senate. Now its time for Senate leaders to ensure that this bill gets to Governor Kitzhaber’s desk.

 See the original post at BlueOregon.com.

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