News from the Senate Majority
Alaska State Legislature

Wendy Lindskoog, Senate Majority Press Secretary
State Capitol
Juneau, AK 99801-1182
Phone: 907/465-4582
http://www.akrepublicans.org
Broadcast Actualities: 800/478-6540

Bill to Ensure Fair Insurance Claims Practice Introduced

For Immediate Release: January 28, 1998 Contact: James Armstrong, Aide to Senator Dave Donley, at (907) 465-6581.

Juneau – A new version of legislation that levels the playing field between injured Alaskans and insurance companies by establishing fair and equitable policy benefits was introduced in the State Senate Tuesday.

Senator Dave Donley (R-Anchorage) explained he introduced Senate Bill 202, "The Alaska Consumers Insurance Reform Act," to ensure fair treatment of injured Alaskans by insurance companies.

"Some insurance providers have skewed the present claims system to unfairly reduce legitimate claims," Donley said. "We hope to ensure insurance claims practices that fairly compensate injured Alaskans."

Senate Bill 202 addresses the growing problem of unfair claims practices by requiring an insurer, within 15 days after a filed claim, to make an estimate of covered claims under the policy. The insurer has 30 days to pay this undisputed amount of the covered claim. If a disputed claim is decided in court and is 10% greater than what the insurer offered to pay, the insurer would be required to pay attorney fees and actual costs incurred by the claimant. The insurer would also be required to pay a penalty equal to at least 20 percent of the damages awarded. This system would discourage insurance companies from withholding payment of legitimate claims until injured parties agreed to their offer.

Under our current arbitration system, when a claim is disputed, the injured Alaskan may be required by their insurance company to pay the costs of arbitration or mediation before the process even begins. When the amount of money at issue is less than the cost of arbitration, claimants become discouraged and often drop their pursuit for a fair settlement.

"SB 202 prohibits this practice and gives insured parties a fair opportunity to pursue equitable claims by requiring the insurer to pay the costs of arbitration if an arbitrator finds the claims to be justified," Donley said.

SB 202 also contains several changes in the insurance code requested by the Division of Insurance necessary to clarify existing law.

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