NASHVILLE (press release)—The National Association of Mutual Insurance Companies presented its State Legislator of the Year Award to three Tennessee state legislators. Reps. Curtis Johnson and Charles Sargent and Sen. Jack Johnson were named award recipients for their support of free-market principles and taking strong positions to improve the insurance market in the state.
The combined legislative efforts of these three legislators resulted in Tennessee becoming the first state in the country to enact a law capping the interest rates charged by third-party litigation funders, or lawsuit lenders. The cap on fees in this legislation should lead the way for the rest of the country, protecting consumers and keeping unnecessary costs out of the judicial system.
“Together, Representatives Johnson and Sargent and Senator Johnson showed that third-party litigation funders could have a negative effect on the citizens of Tennessee,” said Charles M. Chamness, NAMIC’s president and CEO. “Lawsuit financing interferes with the claims settlement process, discourages reasonable settlements, increases litigation costs, and potentially increases litigation, which could result in higher premiums for insurance consumers.”
This financing practice is currently unregulated in most states, which results in consumers being charged interest rates that can well exceed the original amount of the transaction. “Capping interest rates will ensure a larger portion of judgments or settlements are preserved for injured parties, rather than paying uncapped interest rates to financers,” said Neil Alldredge, NAMIC’s senior vice president of state and policy affairs.
The NAMIC Legislator of the Year Award is a statuette of Benjamin Franklin, who founded the first successful mutual insurance company in America more than 250 years ago.