Reform discussions echo national concerns about cost pressures
A bulletin proposed by the Maryland Insurance Administration that would classify the depreciation of labor in property claims settled on an actual cash value (ACV) basis as an unfair claims practice has drawn opposition from the insurance industry.
In the draft bulletin, the administration said that labor differs from goods and materials because it does not deteriorate or lose value over time. As a result, the administration maintains that labor costs should not be subject to depreciation when settling property loss claims.
“This practice contradicts the very purpose of insurance – to restore the insured to the approximate financial position they were in prior to a covered loss – by unfairly shifting significant r…