Beyond Bad Faith

Look closely … A trend is emerging. While we were all distracted, navigating the ever-shifting terrain of pandemic life, courts and legislatures moved forward with attempts to hinder fraud-fighting.

From coast-to-coast, states are lowering the threshold for bad faith exposure while stiffening penalties for violations.

They seek to punish ‘unreasonable’ decision-making while allowing penalties well in excess of the policy limits. With often broad definitions of the term ‘insurer,’ the plaintiff’s bar is actively pursuing actions directly against claims handlers.

Consequently, insurance representatives are left to face a new reality. Standards that are potentially much higher than ‘good faith’ have a very real possibility of personal liability for failing to meet those new requirements.

Such an environment could lead to a greater incidence of insurance fraud as claims handlers feel pressure to simply pay questionable claims rather than to utilize investigative tools.