Georgia prohibits mandated arbitration in insurance contracts, McCarran-Ferguson Act preempts Federal Arbitration Act override
From the Georgia statutes:
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TITLE 9 Chapter 9 NOTE
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ARTICLE 1. GENERAL PROVISIONS
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PART 1. ARBITRATION CODE
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§ 9-9-2. Applicability; exclusive method
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“(c) This part shall apply to all disputes in which the parties thereto have agreed in writing to arbitrate and shall provide the exclusive means by which agreements to arbitrate disputes can be enforced, except the following, to which this part shall not apply:”
“(3) Any contract of insurance, as defined in Code Section 33-1-2; provided, however, that nothing in this paragraph shall impair or prohibit the enforcement of or in any way invalidate an arbitration clause or provision in a contract between insurance companies;”
From the Merlin Law Group.
“Texas Should Look to Georgia on Mandatory Arbitration Issue”
“We know an insurance company has submitted to the Texas Department of Insurance (“TDI”) a policy that requires mandatory arbitration in the event of a dispute on a claim. TDI won’t disclose which carrier submitted the new policy form or provide a copy of the proposed form on the basis of “trade secrets”… a response that makes no sense. What really makes no sense is that TDI would even consider allowing a mandatory arbitration clause into an insurance policy in Texas. Many states, like Georgia, prohibit arbitration clause in insurance policies.”
“Georgia understands the implication of allowing arbitration clauses in insurance policies. Georgia prohibits arbitration clauses in all insurance policies, but not in a contract between two insurance companies. Why is that? Georgia knows what the Texas Office of Public Insurance Counsel knows…
Arbitration can be appropriate and beneficial in resolving disputes between parties who are on an equal footing with respect to power, money and sophistication. When parties are not equals in these respects, arbitration proceedings place the less powerful at an extreme disadvantage
Therefore, if two insurance companies or banks or stock brokerage companies want to duke it out in arbitration, so be it. Let them at it. Those are sophisticated companies who have the same bargaining power when the contract is negotiated and the arbitration clause is agreed to. Not so for you and me and every other policyholder. Our insurance company doesn’t negotiate with us as to what provisions our insurance policy will have in it. We pay a premium and we get a booklet, which is out policy. We can’t change anything in the policy. We have to take it or leave it.”
“Everyone should stop what they are doing right now and call or mail or email their state representative and state senator and tell them to enact the same law Georgia has (and Louisiana too). Tell them to enact a law that makes arbitration clauses in insurance policies illegal in Texas.”
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