A recent article authored by the national publication Claims Journal cites the “shock waves” reverberating in the insurance industry in the wake of a court decision addressing liability in a bad-faith matter. The Journal states that an appellate court decision from a Washington state tribunal has reportedly chilled “adjusters and insurers across the country.”
Judging from the near hysteria evidenced within the industry following the ruling, it might seem that the decision shattered some fundamental canon or key principle within the insurance universe.
In truth, all it did was this: reasonably stress that an insurance company adjuster acting in bad faith to undercut an insured’s coverage benefits be held personally liable for that conduct in a court of law.
Should that be at all controversial?
We submit a “hardly so” response at the Oklahoma City pro-policyholders’ insurance law firm of Mansell, Engel & Cole. In fact, calling out the individuals who are personally responsible for insurers’ responses that deny, delay or otherwise circumvent entitled payments to insureds seems eminently just and logical. Failure to do so simply allows them to hide behind a company shield while harming policyholders who have stepped forward with legitimate policy claims.
That is precisely what happened in the Washington case. In that matter, an Allstate adjuster continued to deny the post-accident findings of both a local police department and Allstate itself that a third party was responsible for a serious motor vehicle accident. A jury found for the policyholder decisively, awarding him an amount four times higher than his policy limit.
The insured filed a bad-faith claim against the company and adjuster following the trial verdict. Although the trial court dismissed the adjuster as a defendant, the appellate tribunal reversed that ruling, stating that individual employees of an insurance entity can be found liable for damages in their individual capacity.
The matter is admittedly relevant to one state only, but the insurance industry is concerned with potential ripple effects across the country.
It should be. And industry principals should fully appreciate the merit in policyholders’ ability to pursue meaningful remedies against all bad-faith actors who undermine their lawful entitlements.