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Insurers oppose arbitration ban

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Insurance industry officials are opposing a bill passed earlier this week by a House subcommittee that would abolish use of arbitration agreements in consumer, franchise and employment contracts.

The bill, H.R. 3010, the Fairness in Arbitration Act, passed the Subcommittee on Commercial and Administrative Law of the House Judiciary Committee Tuesday by a voice vote.

“As drafted, the bill is overly broad and appears to implicate contracts beyond those contracts it is purported to affect,” Marc Racicot, president of the American Insurance Association, Washington, wrote Monday in a letter asking the subcommittee not to act on the bill.

Enactment of H.R. 3010 would set a “dangerous precedent, one that would limit the use of arbitration and other alternative dispute resolution mechanisms to avoid costly and time consuming litigation,” Racicot wrote in the letter.

Observers were expecting the full House Judiciary Committee to pass the bill Wednesday, but strong insurance industry opposition delayed action, according to officials at the Institute for Legal Reform, a unit of the Chamber of Commerce, Washington.

Action on a companion bill, S. 1782, is pending in the Senate Judiciary Committee.

The AIA and other business groups, including other financial services groups, have argued that the anti-arbitration bills are “disconcerting” because they are “unwarranted and would wreak havoc on a long-standing and effective form of alternative dispute mechanism.”


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