INDIANAPOLIS, March 24, 2016 /PRNewswire/ -- With the stroke of his pen, yesterday Indiana Gov. Mike Pence affirmed that consumer legal funding is the purchase of an asset—not a loan—and that access to the product is essential for the people of Indiana. HB 1127, sponsored by state Rep. Matt Lehman (R-District 79), will make Indiana the third Uniform Consumer Credit Code (UCCC) state whose legislature has reached this conclusion in recent years. This puts the momentum on the side of legal funding supporters, who have been battling with the insurance industry to preserve consumer access to the product.
Legal funding allows a person with a legitimate personal injury claim to sell a portion of their potential settlement for money upfront. Legal funding can help people avoid taking unfair, low-ball settlement offers from insurance companies. As a result, the insurance industry and their proxies, including the U.S. Chamber of Commerce, have been trying to take down legal funding providers state-by-state.
One tactic used by the insurance industry has been trying to wrongfully classify legal funding as a loan. They do this to impose improper regulations on providers—all of them small businesses—and thereby limit consumers' ability to get funding in their time of need.
Loans and purchases are obviously quite different. Loans require collateral or credit as well as monthly payments. Default on a loan can lead to repossession, damaged credit, or collections. Purchases have none of those characteristics, so legal funding doesn't either.
"It's ridiculous. If I want to sell my couch on eBay, I'm able to do that without the retail industry stepping in with improper regulations. People should be able to sell their property as they see fit. The same idea applies to a claim against an insurance company," said Rob Johnson, Executive Director of The Alliance for Responsible Consumer Legal Funding (ARC).
Johnson is a former Republican state legislator from Oklahoma, another UCCC state. Going against the massive insurance industry lobby, Johnson, a small business supporter, helped usher in comprehensive consumer protections for legal funding in 2013 while fostering free-market principles and defining legal funding as its own type of product. Maine, also a UCCC state, passed similar legislation in 2007.
Because their legislatures stepped in and prohibited improper regulation, the citizens of Oklahoma and Maine have had a competitive marketplace that makes legal funding easier to access and more affordable if they choose to use it.
"Insurance companies shouldn't be able to strong-arm people into taking the settlements they want them to take. By affirming that a claim is an asset, Indiana has empowered everyday people," said Johnson. "This is a big win for consumers, and a win that is likely to help us in others states across the nation. We are glad the legislators and Governor of Indiana understood the need for this product."
After an accident, many people are temporarily unable work due to their injuries. In these cases, it can be difficult to get a loan because they aren't qualified due to a lack of income. For them, legal funding is a good option precisely because it is a purchase. They can sell a piece of their potential settlement for a set price without taking on any additional obligations or taking on more risk.
Johnson said, "Legal funding is still relatively new, and we are continuing to work with states across the country to regulate the industry properly. Indiana legislators definitely got this part of the bill right. We are confident other states will continue to thoughtfully consider this issue and side with their constituents—not the big insurance companies."
The Alliance for Responsible Consumer Legal Funding (ARC) is a coalition established to preserve legal funding as a choice for the many Americans who have suffered an unexpected economic loss due to an accident and have a pending legal claim. Legal funding can help families pay for immediate personal needs such as rent, mortgages, car repairs, utilities and groceries while they wait for their claims to settle fairly. ARC trade association promotes practices and regulations that lead to informed decisions between individuals and their attorneys, so families have more options—not fewer.
Contact: Crystal Olsen
SOURCE Alliance for Responsible Consumer Legal Funding (ARC)