Oregon bill would give consumers another tool in fights against insurers

Around 5 a.m. on Feb. 14, 2021, a 100-foot maple tree crashed into the Lake Oswego home where Jennifer Harvey lives with her husband and three children.

“It was a different type of Valentine’s Day massacre,” she joked, describing the sound as like a “freight train” hitting her house.

Harvey’s husband immediately contacted their insurance company. It did not go smoothly. Months of negotiations went nowhere, she said, and handoffs among insurance adjusters seemed designed to force her to give up.

One option not available to the Harveys: a lawsuit under a key state consumer protection law.

On Tuesday, Oregon lawmakers moved to change that, passing a bill out of a Senate committee designed to make it easier to hold insurance companies accountable when disaster strikes, but one that opponents say is unnecessary and will only increase insurance costs at a time of worrisome inflation.

Oregon’s Unlawful Trade Practices Act gives individuals a right to sue businesses for alleged deceptive business practices, but Oregon is one of 21 states that exempts its insurance industry from its deceptive acts and practices laws.

Senate Bill 174 would eliminate that exemption and make it easier to take legal action against insurance companies.

“It provides a legal framework to hold insurers accountable for fraudulent or misleading practices, aligning it with other consumer industries in Oregon,” said Jagjit Nagra, executive director of the nonprofit organization Oregon Consumer Justice, who testified in support of the legislation at a March hearing.

The bill would also give the Oregon Department of Justice, which supports the legislation, as well as other prosecutors, the authority to bring a lawsuit at the request of the director of the state Department of Consumer and Business Services, the agency that regulates insurance.

“As attorney general, I want everybody in Oregon to have a place to turn when they’ve been harmed,” Oregon Attorney General Dan Rayfield told lawmakers at a hearing March 5, calling the legislation a priority for his office.

Several business and insurance groups oppose the bill, saying it will lead to frivolous lawsuits, which will drive up the cost of insurance. They also say the state’s Department of Consumer and Business Services has the authority to act against insurers who deal in bad faith.

“Our regulator wields ample authority to protect consumers and punish insurer wrongdoing and they exercise that authority zealously, at no charge to consumers,” said Ryan Chieffo, director of government and regulatory affairs for Standard Insurance Co., in testimony last month.

In 2024, the state recovered $8.9 million for consumers who filed complaints against insurance companies. It also levied $9.4 million in penalties.

Those sorts of arguments have been effective at defeating similar legislation as recently as 2023.

Late Tuesday, the legislation passed out of the Senate Judiciary committee on a 4-2 vote, meeting a key deadline to pass out of committee in the Senate.

“When insurers, or any other business in Oregon lies, cheats, steals, does anything wrong, with regard to an Oregonian, a consumer, I want to give Oregonians every tool they have to protect themselves,” said Sen. Anthony Broadman, D-Bend, who voted in favor of the bill.

Sen. Mike McLane, R-Powell Butte, voted against the legislation.

“At a time when we have folks whose insurance is not being renewed and other people are being costed out, I’m very concerned that we’re here and out of a desire to want to help, we’re causing repercussions yet again,” he said.

Given cuts to federal agencies that protect consumers, including the Consumer Financial Protection Bureau, Nagra and other backers hope the bill becomes law this time around.

“It’s more important than ever at the state level that we stand up for consumers,” Nagra said.

As for Harvey, she said after dealing with “six or seven” different insurance adjusters and two rounds of mediation, her home is finally back to pre-loss condition.

“You pay for a policy thinking it’s going to protect you, and when you need it, it was not there,” she said.

– Matthew Kish covers business, including the sportswear and banking industries. Reach him at 503-221-4386, mkish@oregonian.com or @matthewkish.

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