A bill currently under consideration in the Wyoming Legislature that would limit insurers’ use of loss history information could have unintended consequences for the state’s homeowners, according to a leading national insurance trade association.
“Loss history reports on individual dwellings are a vital source of information that companies need to adequately assess the risk associated with insuring a particular home,” said Sam Sorich, vice president and Western Region manager for the Property Casualty Insurers Association of America (PCI).
“HB 0040, which was passed out of the House Corporations Committee on Thursday, would place restrictions on the use of information insurers receive regarding damage to a home. Sometimes losses do not result in payments to the insured, but that doesn’t necessarily mean that a claim was not reported or that the company was not obligated to investigate. There are many reasons why a payment may not be made ¾ ranging from claims that do not exceed the deductible, to fraud. And even in a situation where the insured does not receive a check, the company may still have incurred expenses investigating the loss.
“PCI will continue to oppose this bill and will urge the Senate to reject this unnecessary restriction on insurers,” said Sorich. “Companies have to be able to evaluate the risk before they agree to insure it – especially in the case of homeowners’ contracts where an average policy’s coverage often totals hundreds of thousands of dollars. These kinds of restrictions ultimately make it difficult for companies to do business in the state and could lead to the unintended consequence of companies getting out of the homeowners business in Wyoming. We don’t want to see that. Competition is good for the consumer.”
“There are many reasons why an insurer needs to be able to consider prior loss information,” said PCI policy manager Lynn Knauf. “Loss databases are not intended to collect information on general coverage questions, and companies do not record general coverage questions that are not related to any damage to property as ‘claims.’ If damage to the property is reported and there appears to be the intention of pursuing available coverage, the insurer is obligated to consider this call as a claim.
“Sometimes hidden damage is discovered after a loss occurs, or in the case of a liability claim, a lawsuit may be filed at a later date. So it is always important to have a record of the call and that damage occurred. It would be far worse to later have to deny a claim, consistent with contract provisions, because the loss wasn’t reported within a reasonable time period.
“In every state, insurers must comply with unfair claims practice or trade practice laws that require fast claim handling or claim resolution,” Knauf added. “These laws protect the consumer – and they also limit the insurer’s ability to take a ‘wait and see’ approach to smaller claims. Even in the absence of such laws, to delay assignment of a claim may be poor customer service.”
PCI member companies write one-third of all the property/casualty insurance in the state, and 25 percent of the homeowners insurance.
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