Illinois Consumers Will Suffer if Uninsured Motorist Arbitration Statute is Eliminated

The Illinois Supreme Court should overturn the ruling of the Third District Appellant Court to eliminate the Illinois statute requiring mandatory arbitration of uninsured motorist disputes, the National Association of Independent Insurers (NAII) contends.

The NAII filed an amicus curiae brief in the case of Reed v. Farmers Insurance Group on February 11, 1998, in support of Farmers Insurance Group. Reed's position is that the arbitration clause in her insurance policy is unenforceable as a matter of public policy and that an Illinois statute requiring that uninsured motorist disputes of $20,000 or less be arbitrated is unconstitutional.

"Eliminating the statute or the mandatory arbitration clause in an auto insurance policy would have adverse public policy ramifications," said Donald Cleasby, senior counsel of the NAII. "Doing so would assure that significantly more uninsured motorist disputes would be tried in court."

Cleasby went on to explain that this would further burden an already overcrowded court system in Illinois which would delay the payment of claims to the consumer. "The consumer would eventually suffer because increased expenses for attorney's fees and court costs could result in higher insurance premiums," Cleasby noted.

The NAII explained that the mandatory uninsured motorist arbitration provision is clearly constitutional because it expands, rather than limits or extinguishes, the right of the consumer. Cleasby explained that the statute requiring auto insurers to offer uninsured motorist coverage is intended to supplement common law tort remedies against uninsured drivers. The consumer, after recovering economic loss under the statutory uninsured motorist provision, can still exercise the option to sue the uninsured motorist.