Montana Senate Panel Rejects Bad Faith Law Changes

By Meg Green
A.M. Best
March 30, 2009

Montana lawmakers voted down HB 345, which would have amended the state’s existing third-party bad faith law to allow for punitive damages and attorney fees.

The Property Casualty Insurance Association of America, which offered testimony against the bill, said it would have increased the cost of insurance.

The Montana Senate Business and Labor Committee voted down the measure with a 10-1 vote.

“PCI strongly opposed this bill, and the vote was a win for Montana consumers,” Kelly Campbell, PCI regional manager, said in a statement. “Montana already has unfair claims handling laws and regulations on the books, and the competitive nature of the insurance industry places strong pressure on insurers to deliver good customer service when a claim must be settled. This was an unnecessary amendment that would have done nothing to help consumers.”

As of March 2, 2009, bad faith legislation has been introduced in Colorado, Connecticut, District of Columbia, Florida, Georgia, Indiana, Iowa, Michigan, Minnesota, Montana, New Jersey, New Mexico, Oregon, and Rhode Island, according to PCI.

Earlier this month, Montana adopted a law that allows captives to write surety and marine insurance. Under the new law, the maximum premium tax remains at $100,000 per year, with a pro-rated payment schedule now applicable for first year captive insurance companies subject to the minimum tax to help reduce front-end organizational costs, according to the Montana Captive Insurance Association (BestWire, March 20, 2009).

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