Insurer Exemption From N.H. Consumer Protection Law Questioned

The mortgage crisis is prompting some people to take another look at New Hampshire’s consumer protection law.

Six years ago, the Legislature changed the law to exempt the banking, insurance, public utilities and securities industries from the law’s protection against unfair or deceptive trade or practices. That means that harmed customers of these industries can’t bring a lawsuit to recover damages.

Critics say New Hampshire has one of the weakest consumer protection laws in the country. But supporters of the law say consumers are better off having state regulators protect their rights.

“I could be proven wrong, but in my mind I can’t fathom that the banking commissioner cannot be better at taking care of the consumer than the courts,” said state Rep. John Hunt, R-Rindge, who was chairman of the House Commerce Committee when the exemptions were enacted.

Concord lawyer Martin Gross was a lobbyist for the American Insurance Association when the law was changed. He said it makes sense to exempt insurance companies because there’s another law that allows consumers to sue an insurer if the insurance commissioner has investigated the company for engaging in unfair trade practices. However, Gross said the subprime crisis may be reason to reconsider the broad exemption.

“Personally, I think the rascality that’s gone on in the mortgage business just cries out for more regulation,” he said.

David Rienzo is an assistant attorney general in the consumer protection bureau, which opposed the 2002 changes. He said the Consumer Protection Act is supposed to open the courthouse door.’ “It’s designed to give the public the tools that they need to protect their own rights,” he said.

Last year, Rep. Neal Kurk sponsored a bill to exempt from the Consumer Protection Act only “any transaction that is expressly permitted” by the regulators listed in the law. Kurk, R-Weare, noted that the public utilities commission has a consumer advocate officie but none exists in banking, insurance or securities regulation.

“So the consumer, from my perspective, is invisible at the table,” he said. The bill was killed by the House.

Topics Carriers Legislation