Bill Banning Bonuses For Denying Insurance Claims Is Killed
By Denver Business Journal - Bob Mook - April 7, 2009Colorado lawmakers have killed a measure that would prohibit insurance companies from giving bonuses and incentives to adjusters and other employees for denying claims.
The legislation, Senate Bill 103, sponsored in the House by Rep. Jack Pommer, D-Boulder, was postponed indefinitely by the House Health and Human Services Committee by a vote of 7-4 Monday.
The bill, which the Colorado Senate approved on March 23, was intended to make tying compensation to denying insurance claims illegal.
"There’s a profit motive in the insurance industry to pay off no more than what’s owed," said Mike Hodges, who testified for the Colorado Trial Attorneys Association. Hodges said that providing financial incentives for denying claims occurs "subtly" in the insurance industry.
Kelly Shanahan, who testified for the Colorado Consumer Health Initiative, said insurers increasingly are citing claims denials as a benchmark of their financial success.
But opponents argued SB 103 was unnecessary because insurance carriers don’t financially reward their workers specifically for denying claims.
Kelly Campbell, who testified for Property and Casualty Insurers Association, said supporters of the bill haven’t produce a single instance in Colorado where companies provided incentives for denying claims. She added if there were, such business practices would surely be scrutinized by Colorado’s Insurance Commissioner.
Campbell said she believed that passage of the bill would have increased litigation in the industry and give attorneys another avenue to investigate insurance workers’ records.
She said a recent law that gives the Colorado Insurance Commissioner the authority to dramatically increase fines for insurers that unreasonably deny or delay claims payments already is addressing many of the issues that SB 103 attempted to rectify. | 
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