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Committee approves raising statutory insurer penalty from 12% to 25% in SB 350
Summary
Senate Bill 350, presented as a companion measure to strengthen sanctions for insurers that improperly deny or delay claims, would raise the statutory penalty recoverable by insureds from 12% to 25%. The committee voted to report the bill passed to the floor.
Sen. Bryant and other sponsors presented Senate Bill 350 as a targeted change to increase the statutory sanction available to insureds when a court finds an insurer improperly denied coverage. The sponsor described the change as increasing the deterrent effect of the penalty: "It moves us from 12% recovered ... to 25%," he said.
Industry counsel warned the committee that raising the statutory penalty could have far‑reaching consequences for premiums and litigation exposure. Kevin Kress argued the existing 12% penalty, attorney fees and common‑law duties already provide meaningful sanctions and cautioned that a larger statutory penalty could be absorbed as a business cost or result in higher premiums.
Committee members debated the size and economic effect of the penalty but ultimately moved and voted to pass the bill. One senator recorded a 'No' at the roll (notation in the transcript), while the committee clerk stated "Ayes have it" and reported the bill passed out of committee.
Next steps: SB 350 will be reported to the Senate floor for further consideration; sponsors said they would continue to share supporting analyses with members before floor action.
