Voters Approve Insurance Fair Conduct Act (2)



On November 6, 2007, Washington voters approved R-67, a referral to the people of the legislation entitled “Insurance Fair Conduct Act.” We first reported on this legislation in May, when it was signed by Governor Christine Gregoire. The referendum effort to repeal the

legislation stayed the effective date. Now that voters have approved this legislation, the Act will go into effect on December 6, 2007.

What is the Insurance Fair Conduct Act?

The Act allows recovery of uncapped treble damages for unreasonable denial of a claim for coverage or payment of benefits, and recovery of uncapped treble damages for violation of certain insurance regulations.

To whom does this Act apply?

All those engaged in the “business of insurance” are subject to the Act, except for health plans offered by health carriers. Because long-term care insurance, disability income, employer sponsored self-funded health plans, and dental- and vision-only coverages do not fall within the definition of “health plans,” however, those insurers, too, may be subject to this provision, where

not otherwise preempted.

What is the procedure for filing such a claim?

A claimant must provide written notice of the basis for a cause of action under this Act to the insurer and the Office of the Insurance Commissioner 20 days prior to filing suit. If the insurer fails to resolve the matter before expiration of 20 days after receipt of notice (notice is deemed received three days after notice is mailed), the claimant may bring suit. Notice under this Act

tolls the statute of limitations for 20 days.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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