Connecticut bill requiring insurers pay for arbitration hearing sent to governor
A Connecticut bill that requires insurance companies to reimburse for arbitration hearings if the award is in favor of the claimant has passed both the House and Senate.
HB 6435 passed in the House June 3 and passed quickly in the Senate on a consent calendar in concurrence June 4, the day of the regular session’s adjournment. As of Tuesday, it had yet to be signed by Gov. Ned Lamont.
The governor has 15 days to sign the bill after adjournment from the day it was presented to him, per Connecticut law.
According to current law, the state’s Division of Consumer Affairs shall provide an independent arbitration procedure for the settlement of disputes between claimants and insurance companies for vehicle damage claims in which liability and coverage are not in dispute.
Attempts at mediation by the Division of Consumer Affairs must have failed prior to being accepted for arbitration.
The legislation would amend current law to require the insurance company to reimburse the department for its costs incurred in connection with the administration of the arbitration hearing, unless such claimant rejected the insurance company’s pre-arbitration offer of compromise of equal or greater value than the arbitration award.
According to a state fiscal report on the bill, the Insurance Fund could see a potential revenue gain of less than $35,000 in fiscal year 2026 and less than $50,000 annually starting in fiscal year 2027.
“The estimate is based on data regarding automobile arbitration hearings and Department of Insurance costs,” the note states. “In FY 22–FY 24, an annual average of 29 arbitration hearings were conducted, with an average of 15 resulting in a decision in favor of the claimant, according to the Department of Insurance.”
It states that the current cost for each arbitration that proceeds to a hearing is $3,075.
The fiscal estimate reduces the future number of arbitration hearings because the state predicts the reimbursement requirement is likely to encourage insurance companies to resolve claims before reaching arbitration.
“The annualized ongoing fiscal impact identified above would continue into the future, subject to inflation and the number of times annually that an arbitration award is in the claimant’s favor in applicable circumstances,” the fiscal note says.
If not vetoed by Lamont, the bill would go into effect Oct. 1.
In May 2024 the Connecticut Department of Motor Vehicles (DMV) released a bulletin that states only repairers or car dealers are in the business of repairing motor vehicles and they are expected to repair vehicles safely and in compliance with available guidelines, including but not limited to, guidance from OEMs. The DMV is the agency in Connecticut that oversees repairer licensing.
All repair decisions should come from a licensed repair professional in consultation with the vehicle owner, the bulletin says. It further specifies “licensed repairers are responsible for the quality and safety of each repair, and should always be mindful of, and guided by, practices and procedures that protect the wellbeing and safety of the motoring public.”
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