By Vicki Smith
For the general liability insurance industry, Oregon’s 2021 legislative session made few changes to normal practice. Every year, we see efforts to amend the Unfair Trade Practices Act (“UTPA”) to include insurance claims handling and create a cause of action allowing an insured to recover damages resulting from unfair claim settlement practices. Those efforts failed again this year. What did change is that insurers need to directly notify third-party claimants of settlement payments. Also, certain limitations period no longer applies to a claim against a dissolved business entity’s insurance assets.
Insurers Must Directly Inform Claimants of Settlement Payments
In an effort to protect claimants from their lawyers’ bad conduct, the legislature passed SB 180, which requires an insurer to directly notify a third-party claimant when it pays to settle a claim. The insurer must notify the claimant, in writing, when it pays to settle a third-party liability claim if:
the settlement payment is $5,000 or more;
the claimant is a person;
the insurer, its agent, representative or attorney delivers the settlement payment to the claimant or the claimant's attorney, agent or representative; and
the insurer received the claimant’s contact information or mailing address from the claimant or claimant’s attorney.
To comply, the insurer can simply send a copy of its cover letter accompanying a settlement check to the claimant. While SB 180 specifically allows this direct communication with a claimant, even one known to be represented by counsel, the bill also limits what can be said to the claimant. The insurer can only state:
That the insurer paid a settlement;
The amount of the settlement;
The date the insurer paid the settlement;
The insurer’s name; and
Any identifying number for the claim.
Interestingly, this is another insurance code requirement that has no teeth, so far. Failure to comply does not create a cause of action against the insurer. That being said, it is in an insurer’s interest to comply with this requirement and either copy third-party claimants on all cover letters accompanying settlement payments of $5,000 or more or create a simple form letter that is sent with every such payment. This bill becomes effective January 1, 2022, and a link to the bill is below. https://olis.oregonlegislature.gov/liz/2021R1/Measures/Overview/SB180
Eliminates a Time Limitation on Claims against Insurance Assets of Dissolved Businesses
ORS 60.644 establishes a limitations period for claims to be presented to a dissolved corporation or limited liability company that publishes a notice of its dissolution. In HB 2377, the legislature created an exception to this limitation period for claims against a dissolved entity’s insurance assets. Other limitations periods still apply, but there is no limitations period for claims against insurance assets based off the publication of the entity’s dissolution. This bill applies retroactively and includes claims that arose before the bill’s effective date.