[Congressional Record Volume 152, Number 67 (Thursday, May 25, 2006)]
[Senate]
[Pages S5256-S5257]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DAYTON (for himself and Mr. Lott):
  S. 3239. A bill to require full disclosure of insurance coverage and 
noncoverage by insurance companies and provide for Federal Trade 
Commission enforcement; to the Committee on Commerce, Science, and 
Transportation.
  Mr. DAYTON. Mr. President, this legislation I am proud to cosponsor, 
along with my distinguished colleague from Mississippi, is called the 
Uniform Insurance Noncoverage Disclosure Act. I call it ``honesty is 
the best insurance policy act.'' It says very simply that all insurance 
policies--medical, homeowners, whatever they are--must state clearly on 
the cover page what the policy does not cover.
  My colleague from Mississippi can speak eloquently and powerfully 
about his experiences in his State post-Katrina, but even before that 
disaster occurred, I have seen similar situations in Minnesota of good 
people whose lives were devastated by illnesses or natural disasters 
and then were further devastated by discovering that their losses or 
expenses were not covered by their insurance policies. For years, they 
had faithfully paid their premiums believing they had comprehensive 
coverage, only to find out too late that was untrue.
  Insurance companies write the policies, they interpret the policies, 
they decide what they will and will not cover, and then they handle the 
appeals and make the final decisions. If they deny the claims, they 
pocket those dollars in profits. If they honor the claims, they pay 
them out in losses. Talk about a stacked deck in their favor and 
against the consumer.
  I have had aggrieved constituents show me their homeowners policies. 
I am an intelligent, well-educated man, but it is impossible to 
decipher them. They contain cross-references to paragraph numbers in 
other policies that are not part of the agreement. They cannot be 
understood, and they are not meant to be understood.
  One Minnesota homeowner lost almost everything to a flood. Too late 
he discovered that his blanket homeowners insurance did not cover 
losses from a flood. He was protected, according to the policy, if an 
airplane crashed into his house or if civil insurrection--meaning a 
revolution--caused damage to his home, but not flooding. What are the 
chances of those different events possibly occurring?

[[Page S5257]]

  Another Minnesota family whose father had worked for a company for 
over 20 years learned that their infant son had been born deaf and 
needed a Cochlear implant. Two of the insurance companies that carried 
those policies for the company covered that operation; the other did 
not, claiming that it was experimental. The family made the unwitting 
mistake of selecting the wrong policy. No one told them that policy 
would not pay for Cochlear implant surgery in its comprehensive family 
coverage, and they, obviously, did not know or could not have known 
that their unborn son would need this surgery some several years later.
  Fortunately, this story has a happy ending. The president of the 
company, Honeywell, Inc., learning of this injustice, overrode the 
policy and decreed that Honeywell, the company, would pay for that 
missing coverage, and that child is now listening to human voices he 
never would have had the opportunity to otherwise.
  But not everyone is in that situation. Not everyone is that 
fortunate.
  So this legislation, again, no costs to it, no bureaucracy, nothing. 
It simply says that the policy must state clearly, in plain English, 
understandable on the cover page, what it will not cover. If it is 
comprehensive, if it is complete, then nothing needs to be said. If it 
is not, if they experience situations that will not be covered, then it 
needs to tell the consumer up front on that front page what they will 
be.
  Mr. President, I yield to my distinguished colleague from 
Mississippi.
  The PRESIDING OFFICER. The Senator from Mississippi is recognized.
  Mr. LOTT. I thank again my colleagues on the Judiciary Committee and 
Senator Craig for allowing us to go ahead and introduce this 
legislation and make brief statements. It is very generous, and we 
thank him for it.
  I am delighted to join my colleague, Senator Dayton, tonight in 
cosponsoring this legislation. He was kind enough to invite me to do so 
and even said: Why don't you be the lead sponsor? And I said no, but I 
will be glad to cosponsor it.
  I think this is an important statement here tonight. Honesty is the 
best insurance policy. It has a good ring to it. It is not going to 
revolutionize the world, but it could make a real difference. This is a 
time when once again, in many parts of the country and particularly in 
my home area, we are very sensitive to the threat of disasters because 
in only 8 days, on June 1, the next hurricane season will begin, and 
the National Oceanic and Atmospheric Administration predicts four to 
six major hurricanes in the upcoming season. So once again people are 
struggling with situations of having lost their homes or having their 
homes badly damaged and being told: No, your insurance policy didn't 
cover your damage. You didn't have flood insurance because, well, you 
weren't in a flood plain, and oh, by the way, your house was washed 
away. It wasn't blown away even though we had winds of 140 miles per 
hour with gusts of 160 or 170 miles an hour, so therefore you didn't 
have any wind damage. I must say it has been a disappointing shock to 
me, the insensitivity and the decisions of certain insurance companies 
and the positions they have taken. Sometimes they will say: Well, wait 
a minute, we told you in the policy we don't cover this, we don't cover 
that.
  I represent a blue-collar community. Most people work in the paper 
mills and the shipyards and are fishermen in my area. They have high 
school educations, but they are not lawyers. They get a house insurance 
policy and they think: I am covered. Now, go back and take a look at 
your insurance policies. If you really take a look at it, you will find 
that this is not covered, that is not covered, this is not covered, and 
the next thing you know, you haven't got much coverage, but your 
premium still goes forward. The standard policies, for instance, don't 
cover earthquakes and floods, and depending on where you live, 
hurricanes may not even be covered. That is going to be determined in 
legal actions. Sometimes they say: Well, unless the policy specifically 
says the hurricane was covered, then it is not covered. Well, that is 
an ingenious argument, too.
  So we have found that there are lots of problems here, and it breaks 
my heart, what I have seen happen to thousands of my constituents and 
people in the neighboring States of Louisiana, Texas, and Alabama. They 
are being told: No, you didn't read the small print in your policy, you 
are not covered, or because it didn't say you were covered, then you 
are not covered. That is why I have joined in sponsoring this bill. 
Surely we should have honesty in everything, including insurance 
coverage. At least we should find a way to help the people understand.
  So this is what this bill does. It is not all that complicated. It 
would require that insurance companies include a noncoverage disclosure 
box--a noncoverage disclosure box--restating in the body of the policy, 
in font twice the current size of the text, all conditions, exclusions, 
and other limitations of coverage under that policy. In other words, 
make it clear. Don't hide it in legalese and gobbledegook. Make it 
title size, make it bold, where people can go and see what they are not 
getting.
  Some people say: Wait a minute, this may be damaging to the 
companies. No, I think it will help the companies. It will increase 
consumer confidence. It will avoid disagreements or conflicts about 
what is covered. You will have a clarification here, and if you have 
questions, then at least you can clear them up. It would be in their 
interests.
  One other criticism, and that is, what is it going to cost the 
Federal Government? Answer: Nothing. And very little to the companies. 
They have these exclusions woven in there, but they are quite often way 
down in the body of some long policy, incomprehensible to the minds of 
normal and sane men and women.
  So I think this is something which would be good. Frankly, I agree 
with the Consumer Federation of America. This small requirement could 
have saved many people pain and suffering and hundreds of millions of 
dollars, maybe even billions, after Katrina. So I think it is a good 
idea, and it is one I am glad to cosponsor. I hope that as we continue 
to look at what we do in the aftermath of recent disasters and how we 
do a better job compared to future disasters, this can be worked into 
the body of legislation. So I am delighted to join as a cosponsor. I 
thank Senator Dayton, and I thank Senator Leahy and Senator Cornyn for 
allowing us to do this.

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