As prices on everything from fuel to food continue to increase, advocates are raising concerns about rising life insurance premiums following last year’s California Supreme Court decision in McHugh v. Protective Life Insurance Co.
And now it’s estimated roughly 20 class action lawsuits have been filed against insurance companies since that ruling, despite the fact that many consumers voluntarily allowed the policies to lapse and have suffered no actual harm, Victor Gómez, executive director of California Citizens Against Lawsuit Abuse (CALA) told the Northern California Record.
The ruling has emerged as a dangerous precedent, Gómez said, impacting premiums – and the pocketbooks of Californians already struggling with record gas prices and inflation.
“It’s basic economics – every time these class action lawsuits are filed and awards are given, that award essentially has to come from somewhere, and it's going to come in terms of higher premium costs for the rest of California life insurance holders,” Gómez said. “Essentially it's an insurance tax that really only benefits trial attorneys. They live in this land of class action lawsuits and live in the land of suing insurance companies.”
The California Supreme Court’s ruling in August of last year found that a 2013 statute, introducing a new grace period for life insurance policies to remain in effect, should be applied retroactively to all life insurance policies, even though that wasn’t included in the law.
Gómez noted class actions filed against public agencies could result in substantially higher public employee costs.
“That additional increase in premiums means less money for roads, less money for parks, less money for traffic safety improvements in your city,” Gómez said. “This can have a detrimental effect on city coffers, but obviously it goes much further than that – it can have a huge effect on California residents who have life insurance and we pay for it out of our own pocket.”
Gómez said people probably don’t realize that such class action settlements far too often provide little to no benefit to the plaintiffs, but do enrich the trial lawyers who bring the suits.
“What we need is for the California courts to require plaintiffs to demonstrate that there was actual harm, and not allow these really baseless class action lawsuits to proceed,” Gómez said. “The courts need to step up and clearly state that there had to have been harm in these cases.”