Bill of the week: House Bill 3243
Chief sponsors: State Reps. Nathan Sosa and Hai Pham (D-Hillsboro) and Sen. Wlnsvey Campos (D-Aloha).
What it would do: Give insurance company customers the right to sue for damages by including the insurance industry under Oregon’s Unlawful Trade Practices Act. A companion bill would specifically allow Oregonians who believe their insurers have treated them unfairly to seek compensation for damages beyond the face value of their insurance policy.
Problem it seeks to solve: There’s no better illustration than the case that caused Oregon courts for the first time to award damages against an insurer.
In July 2017, Steven Moody died of an accidental gunshot while camping in Lane County. When his wife attempted to collect on a $3,000 life insurance policy from Federal Insurance Company of Indiana, the company refused to pay, citing the presence of traces of cannabis in Moody’s blood and an exclusion that allowed it to void the policy if the death was caused by or resulted from “being under the influence of any narcotic or controlled substance.”
Christine Moody sued, seeking the $3,000, plus $47,001 for “emotional distress and anxiety.” The company paid her the $3,000, but the trial court ruled Oregon law didn’t allow non-economic damages—exactly the issue the bill addresses. The Oregon Court of Appeals reversed that decision in January 2022, but the Federal Insurance Company is appealing, so the matter remains unsettled.
Sosa, a personal injury lawyer, says the Moody decision shows the need for his bill. “What that case says to insurance companies is, if you drag a family through the mud, you must pay,” Sosa says. He adds that all of Oregon’s neighboring states, even Idaho, already allow people who’ve been wronged by their insurers to collect damages.
“Insurance companies by design seek to take in money, hold it as long as it can, and pay out as little as possible,” Sosa says. “Sometimes they take that to extremes, and it’s time we ended the special privilege that allows them to do so.”
Who supports it: The Oregon Trial Lawyers Association, public and private unions and various public interest groups.
Who opposes it: Insurance companies—including The Standard, based in Portland—and their agents.
Going back to the 1970s, when Oregon first passed the Unlawful Trade Practices Act, two industries enjoyed exemptions: banking and insurance. Banks’ grace period ended after the Great Recession, which came about in part because of shoddy lending practices. Lawmakers placed that industry under the UTPA in 2009.
They’ve long tried to do the same with insurers. Beginning at least as early as 2011, Democrats have introduced bills that would end insurers’ exemption. But the insurance lobby has regularly mobilized an army to defeat versions of this bill. Insurance lobbyists say the industry is already heavily regulated by the state and that the specter of lawsuits from clients will result in fewer insurance products and policies and higher costs. “This is unnecessary ‘double regulation’ of one of the most thoroughly and comprehensively regulated industries in the state,” says Kenton Brine, president of the NW Insurance Council.
The group that might get a more sympathetic hearing in Salem because of its size and propensity for being small-town pillars is individual insurance agents.
“These policies negatively impacted insurance rates in other states that adopted them,” Lana Butterfield, a lobbyist for the Professional Insurance Agents of Oregon, said in written testimony. HB 3243 “would undermine the existing strong protections we have for consumers already in Oregon.”
The bill gets its first hearing in front of the House Committee on Business and Labor on March 1.
Clinton Mora is a reporter for Trending Insurance News. He has previously worked for the Forbes. As a contributor to Trending Insurance News, Clinton covers emerging a wide range of property and casualty insurance related stories.