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Utah Senate approves timeline and penalty measures for insurers after debate
Summary
After extended floor debate, the Utah Senate passed Senate Bill 62 to set timelines and penalties for first-party auto insurance claims, aiming to deter insurers from lowballing policyholders and speed payments to injured drivers.
The Utah Senate voted to pass Senate Bill 62 on a roll-call vote after extended floor debate over whether insurers delay or underpay legitimate first-party claims.
Senator John Urquhart, the bill sponsor, told colleagues the measure was designed to create financial incentives for insurance carriers to pay claims promptly and fairly. “There are many cases where they lowballed the injured party,” Urquhart said, citing examples in which arbitration awards far exceeded insurer settlement offers.
The proposal would impose specified timelines for first-party claim handling and create penalties where carriers unreasonably withhold payment. Urquhart told the Senate he had reviewed case studies showing insurers offering amounts far below later arbitration awards, including one example where an insurer’s offer of about $159 was followed by an arbitration award of roughly $259,786.43.
Several senators pressed the sponsor for specifics about scope and safeguards. Senator Hilliard described how third-party settlement practices evolved to prevent insurers from walking away after low offers and said the bill was intended to put first-party claims on similar footing. “If you paid for a $100,000 policy, they should come back and say, ‘You bet, you’re my client,’” Hilliard said.
Opponents and skeptics asked about unintended consequences and whether the bill could raise rates or impose penalties unfairly. Senator Madsen and others discussed options for limiting penalties when claimants later disclose new evidence; Urquhart said the bill includes provisions that would not apply penalties where claimants materially hid information later uncovered by insurers.
Senator Eckhart singled out State Farm as an example of a carrier that pays claims promptly, saying companies that already practice timely payment would not be affected. “If they treat their people excellently then I think it’s appropriate to mention that,” Eckhart said.
The Senate adopted the bill as amended. The clerk recorded 22 yea votes, 5 nay votes and 2 absences; the bill will be forwarded to the House for further action.
Next steps: the House will consider the Senate-passed version of SB 62, where additional technical adjustments and negotiations were anticipated by several senators.
