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Committee sends HB6435 to floor shifting arbitration costs to insurers; exception if claimant rejects pre-arbitration offer
Summary
The committee approved HB6435 to require insurance companies rather than the Department of Insurance to pay arbitration hearing costs for automobile physical and property damage arbitration, with an exception when a claimant rejects an insurer's pre-arbitration offer.
The Insurance and Real Estate Committee voted to send HB6435, concerning the automobile physical and property damage arbitration process, to the floor with proposed substitute language that changes which party pays arbitration hearing costs.
Under the substitute language presented, insurance companies — not the Department of Insurance (DOI) — would bear the costs associated with arbitration hearings. Committee presenters explained the substitute clarifies that those costs are incurred by insurers rather than by the arbitrator or the department.
Nut graf: The proposal shifts administrative expense from the regulator to insurers; sponsors said the change is intended to align cost responsibility with the industry while preserving an exception for claimants who reject a pre-arbitration settlement offer.
Representative Havelock D'Amato asked whether an exception applied and quoted the bill language around line 54: “Unless the claimant rejects the insurance company's pre-arbitration offer ... of compromise of equal or greater value than the actual award itself.” Insurance Department staff confirmed that the exception remains in the substitute. The department also told the committee the total cost is minimal, although Representative Havelock D'Amato asked whether shifting costs could increase individual rates; staff said any rate impact was not projected to be large.
Representative Nuccio asked why the DOI would stop paying for the hearing costs when the DOI’s budget is funded in part by industry assessments. Presenters said the department felt the industry should directly pay these arbitration costs rather than include them in the broader assessment that funds DOI operations.
The committee moved and seconded the JFS motion. A roll call vote was conducted and the committee approved the substitute recommendation; votes were recorded and held open until noon, per the clerk.
Ending: With committee approval, HB6435 will advance to the House floor under the proposed substitute language.
