AIA Opposes Connecticut Senate Bill 763

The American Insurance Association (AIA) is calling on Connecticut’s Insurance and Real Estate Committee to reject Senate Bill 763, An Act Concerning the Connecticut Unfair Insurance Practices Act.

According to testimony submitted Tuesday on behalf of AIA, Connecticut’s current Unfair Insurance Practices Act (CUIPA) already provides appropriate protections for consumers, while the proposed amendments in Senate Bill 763 will only harm consumers.

“CUIPA is based on the NAIC Model Unfair Trade Practices Act which a vast majority of states have adopted or modeled statutes or regulations after,” explained Laura Kersey, AIA northeast region assistant vice president. “We are not aware of any compelling reason for Connecticut to change what has been the standard for the state for more than 50 years and is currently the norm throughout the country.”

According to AIA, the bill would allow a new private cause of action for unfair claim settlement practices without the necessity of showing a general business practice on the part of an insurer. AIA has concerns that allowing private causes of action will result in CUIPA violation claims as part of every insurance coverage settlement dispute.

“In those scenarios, insurers will likely settle more unsubstantiated claims to avoid a lawsuit, which will increase their settlement costs,” said Kersey. “Ultimately, the additional settlement costs stemming from the threat of litigation will be reflected in consumers' premiums. This is an unfair result for consumers, especially in the current economic climate and will lead to a more litigious environment in Connecticut.”