Podcast Center
Video Center
Webcasts
Resource Center
Events
December 16, 2001 at 07:00 PM
Insurers Mindful Of Class Action Suits As Suitability Model Proceeds
By
Chicago
Wrangling over the development of a penalties section of a model act and regulation for the suitable sale of insurance underscored just how much attention insurers are paying to the trial bar and the risk of expensive class action suits.
The work during the winter meeting of the National Association of Insurance Commissioners here was just one of several sessions where the impact of class action suits on insurers and on the authority of state insurance commissioners was raised.
The issue during a session on the Life Insurance and Annuities Suitability Model Act focused on proposed language in the penalties section offered by the American Council of Life Insurers in Washington.
The reference would give sole authority of a commissioner to enforce penalties.
Michael Lovendusky, senior counsel with the ACLI, said the potential for private cause of action suits from the trial bar that the penalties section could create is “positively frightening.” That is why the commissioner should have “sole and exclusive jurisdiction” over penalties, he said.
Birny Birnbaum, executive director of the Center for Economic Justice in Austin, Texas, said that in the past, market conduct problems have surfaced because trial lawyers and consumers have filed lawsuits, not because insurance departments have addressed problems.
“In a time of limited resources,” Birnbaum said, “it makes no sense not to rely on the public to identify and help enforce insurance laws.”
Brian Staples, a regulator with the Kentucky department of insurance, said, “I cant support anything that would limit a consumer’s ability to seek what they think is fair or equitable.”
