Minn. Senate Fails to Advance Good Faith Insurance Proposal

The Minnesota Senate put a halt on a so-called insurance reform bill that has bedeviled lawmakers this session.

What had been called the “good faith” insurance provision would have made it easier for consumers to sue insurance companies over denied or delayed claims. That drew the ire of House Republicans last month when it was included in a larger public safety spending bill, and legislative leaders dropped it from that bill in order to gain Gov. Tim Pawlenty’s signature.

A working group formed to try to address concerns of opponents, including influential insurance companies. That group brought forward a reworked version, which Sen. Tom Neuville, R-Northfield, said was an effort to make lawsuits less likely while still ensuring protection for insurance consumers.

It does so by creating a specific penalty for insurance companies that breach policyholders’ contracts, with policyholders able to receive monetary damages and reasonable attorney fees.

But Sen. Geoff Michel, R-Edina, was skeptical of that claim.

“This is going to raise premiums on Minnesotans,” Michel said.

The Senate narrowly approved an amendment with Neuville’s effort at compromise, but then the bill got snared in the maneuvering that often marks the final weeks of the legislative session. Senators first voted to send it back to committee, which could have doomed its chances for the session, but then about an hour later they reversed that vote.

The underlying bill is now awaiting a vote by the full Senate.