Department seeks to shift arbitration costs to insurers to encourage settlements in auto damage disputes

At a public hearing the Connecticut Insurance Department described proposed changes in House Bill 64‑35 that would put the cost of automobile physical‑damage arbitration on insurers when claimants prevail, a step the department says would encourage pre‑arbitration settlements.

Commissioner Andrew Mays said state law currently requires a $20 arbitration filing fee from each party, but department administrative costs to run the arbitration process have risen since the procedure began in 1989. He told the committee that the department's intent is to "encourage pre arbitration resolution of automobile physical damage claims," and that shifting the cost to insurers when they lose mirrors the health‑insurance external review practice where the insurer pays independent review organization fees.

Mays cited recent figures: six arbitrations were decided in favor of consumers with total recoveries of $15,263.59; under the department's current contracting estimates those six cases would have cost roughly $18,000 in arbitrator fees (about $3,075 per arbitration). Mays said the department originally proposed insurers pay full arbitration costs but modified the draft to ask insurers to pay only the arbitrator's fee (not the nonrefundable department administrative cost), though he indicated the department preferred the original language.

Attorney Matthew Forrest of Forrest McPadden, who represents both individuals and businesses in property‑damage litigation, testified with recommended clarifications. Forrest asked the committee to add language ensuring claimants are not left bearing arbitration costs and to confirm that arbitration can address all losses reasonably related to a crash, such as diminished value or loss of use. He said such clarifications would reduce the need for related litigation.

Representatives asked whether the rule could chill claims if one side faced outsized cost risk; Forrest noted each party already pays a filing fee, and the statute contains offer‑of‑compromise mechanics that limit fee exposure when a claimant rejects an adequate offer. No committee vote or amendment was recorded in the provided transcript excerpt.