Montana Senate Supports Banning Zero-Dollar Claims In Insurance Decisions

Feb. 07--HELENA -- A bill to ban insurance companies from using "zero-dollar claims" as a reason to cancel policies or raise rates received strong support from the Montana Senate, where it appeared Monday after having been tabled in committee for several weeks.

Currently, companies can cancel insurance policies, bar renewal or raise rates because a customer simply asks questions about a potential claim -- even if the company never made any payment related to the incident.

"What's particularly ironic about this is most policies require you to report any potential claims, whether anything comes of it or not," Sen. Mary McNally, D-Billings said. "I don't think it's fair. I don't think it's right."

She noted she first learned of the problem when hundreds of policies were canceled in the Billings area after repeated hailstorms. Although some of those cancellations were likely based on risk calculated using claims that the company actually paid out, some were instead the result of risk assessments based on damage that the customer paid for themselves and cost the insurance company nothing.

The measure was first supported by former State Auditor and Insurance Commissioner Monica Lindeen, a Democrat, but also has been backed this year by Republican Matt Rosendale, who took office in January. A 2015 version of the bill failed, in large part, because it also would have limited the age of claims companies could consider when making underwriting decisions. That is not part of this year's bill.

The bill would apply to a broad range of insurance policies, from homeowner's and auto to commercial property and professional liability.

In testimony before the Senate Business, Labor and Economic Affairs Committee the first week of January, several lobbyists for the insurance industry opposed the measure, arguing the information about all incidents, even ones that do not lead to a claim or payout, are valuable in calculating their rates and risks. It ultimately passed out of committee on a 9-1 vote, with Great Falls Republican Sen. Steve Fitzpatrick in opposition.

On Monday, the full Senate gave preliminary approval to the measure in a 42-8 vote. Fitzpatrick was joined by seven other Republicans to cast "No" votes: Keith Regier of Kalispell, Tom Richmond of Billings, Daniel Salomon of Ronan, Nels Swandal of Wilsall, Chas Vincent of Libby, Roger Webb of Billings and Jeffrey Welborn of Dillon.

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