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Kontowicz v. American Standard Insurance Co. of Wisconsin1/19/2005
language, holding as follows:
It is readily apparent that [Wis. Stat. § 601.01(2)] does not by express language confer upon any group a right of action. Indeed, it does not by its terms impose a duty, the breach of which could be actionable. No one would argue that fair and equitable treatment of insurers, insureds, and claimants is a desirable goal and one which is worthy of expression in this type of legislation. However, when this stated purpose is viewed with the others in the section, it is clear that the overriding goal of these statutes is to provide the benefits to the general public welfare which flow from a well-regulated insurance industry.
Kranzush v. Badger State Mut. Cas. Co., 103 Wis. 2d 56, 76, 307 N.W.2d 256 (1981).
. American Standard and Metropolitan direct us to the genesis of the statute, which first emerged during the 1975 legislative session as "Timely payment of claims" under Wis. Stat. § 631.02. Later that session, the legislature created Wis. Stat. ch. 636 (1975), entitled "Claims Adjustment," and continued § 631.02, "Timely payment of claims," as the newly created Wis. Stat. § 636.10(1) (1975).
. Interestingly, and nearly contemporaneously, the Wisconsin courts were grappling with another issue related to fair claims practices, specifically, whether an insured could state a claim for the tort of bad faith against the insurer. See, e.g., Drake v. Milwaukee Mut. Ins. Co., 70 Wis. 2d 977, 983, 236 N.W.2d 204 (1975) (implicitly recognizing insured's claim for insurer's bad faith refusal to honor claim); Anderson v. Continental Ins. Co., 85 Wis. 2d 675, 680, 271 N.W.2d 368 (1978) (an insured may bring a tort action against an insurer for the bad faith refusal to honor a claim of the insured). In Anderson, our supreme court shed some light on the purpose of the interest penalty, at that time known as Wis. Stat. § 636.10 (1975), and its relationship to the tort of bad faith.
As stated above, the tort of bad faith is not for the breach of a contract. It is a separate tort. Sec. 636.10 is merely an additional provision of the insurance contract incorporated into it by operation of law. It is unrelated to the tort of bad faith. In the event of late payment, augmented interest would be due under the statute although no bad faith was attributable to the insurance company.
Anderson, 85 Wis. 2d at 696. The court placed the interest penalty squarely within the contractual relationship by operation of law.
. Our supreme court has also provided guidance on the relationship between an insurer and a third party whose claim lies in tort:
The insurer's duty of good faith and fair dealing arises from the insurance contract and runs to the insured. No such duty can be implied in favor of the [third party] claimant from the contract since the claimant is a stranger to the contract and to the fiduciary relationship it signifies. Nor can a claimant reasonably expect there to be such a duty ....
Kranzush, 103 Wis. 2d at 73. Although the Kranzush court addressed the issue of whether to extend an insurer's duty of good faith and fair dealing to third-party liability claims rather than the interest penalty issue presented here, we find the analysis sufficiently analogous and look to the court's reasoning for guidance.
. Kranzush instructs that the insurer's duty of good faith and fair dealing, which arises from the fiduciary relationship, exists "whether the company is attending to the claims of third persons against the insured or the claims of the insured itself." Id. at 62 (citation omitted). Here, although the third party may benefit from the onus placed on the insurer, the pr
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