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State Representative Joe Atkins
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-4192
For more information contact: Matt Swenson 651-297-8406
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HOUSE APPROVES MEASURE TO HELP MN BUSINESSES RECOVER INSURANCE CLAIMS
ST. PAUL, MN - The State House approved a measure (HF417) today by to help protect Minnesota businesses from delay and deny tactics used by insurance companies to avoid payments on legitimate business insurance claims. The bill, authored by Commerce and Labor Chair Joe Atkins, ensures that when a business in Minnesota proves its insurer breached its insurance policy by failing to honor an insurance claim, the business is entitled to: 1) reasonable attorneys’ fees, and 2) 12 percent interest on the amount due under the policy.
“Right now in Minnesota, insurance companies have a financial incentive to delay and deny payment of business insurance claims for as long as possible," said Rep. Atkins. “By dragging out claim dispute for months, and even years, insurance companies can keep their money, earn interest on it, and exhaust a business’ resources and incentive for pursuing the claim.”
According to industry experts, that’s a widely known practice insurance companies regularly employ called “earning interest on the float.” For example, assume a business has a warehouse badly damaged in a storm. The business has a $1 million insurance claim on the warehouse, which is roughly the cost to rebuild it. But when that business submits the claim, the insurer denies the claim and the business is forced to take the insurance company to court. After three years of litigation, the business has incurred $400,000 in attorneys’ fees and $100,000 in other expenses. Even if the business wins the lawsuit, the most it can recover is $1 million. Meanwhile, the insurer has earned 3 years of interest on $1 million and the business is out $500,000.
“Under the current system, insurance companies win by not paying what they owe, and nothing has stood in their way until now,” said Atkins. “It’s time to stand up for the little guy. When Minnesota businesses sign an insurance policy and pay their premiums on-time, they ought to get the coverage they paid for.”
Atkins’ stresses the importance of passing this bill during a time when many Minnesota businesses are facing considerable economic challenges.
“No insurer should turn a profit on the misfortune of a struggling business owner, particularly in the middle of the worst recession Minnesota has seen in decades,” Atkins said. “Small businesses owners are struggling to make ends meet and keep their businesses alive during this economic crisis. The last thing they need is an insurance company dragging them to court for years for a claim they’re rightly owed.”
Atkins’ bill passed today in the House by a vote of 75 to 56. The legislation (SF528) will be up for a vote in the Minnesota Senate in the coming weeks. More information can be found online at www.house.mn.
News Items
- Rep. Atkins, Sen. Lourey Introduce Health Insurance Exchange Legislation - (Posted: Jan 9 2013 3:44PM)
- Rep. Atkins – Statement on Deal to End NHL Lockout - (Posted: Jan 7 2013 2:05PM)
- Rep. Atkins to Hold Minnesota House Hearing on Economic Impact of Hockey Lockout - (Posted: Jan 2 2013 3:20PM)
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