Aug. 10--CHEYENNE -- A proposed bill would give the state more power to crack down on insurance companies that fail to comply with their contracts or policies.

Lawmakers on the Joint Corporations, Elections and Political Subdivision discussed the proposal on Thursday. It would allow the state Department of Insurance to punish companies if they don't honor their word.

The committee declined to sponsor measure, but one member said he would carry it himself in the 2013 general session.

Jim Mitchell, staff attorney for the Department of Insurance, said Wyoming law lacks a specific provision that lets the state take action on contract or policy disputes.

He said if residents have complaints, all the department can do is to refer them to the courts.

Mitchell said the high cost of legal fees makes this hard for many.

The proposed legislation would add language to make it an "unfair and deceptive act" for an insurance company to frequently fail to comply with a policy or contract.

This means the state would have the power to punish it if the violation is frequent enough to "indicate a general business practice."

The penalties can include fining the companies or banning them from operating or offering the policy in the state.

"What we are trying to do is to say that if you put something in your contact and you don't follow it, the consumer should not have to go court," Mitchell said. "The Wyoming Department of Insurance should be able to help that consumer get to a resolution."

Mitchell said the threat of penalties hopefully would motivate the companies to honor their agreements.

He added that there have been 109 complaints dealing with policy or contract disputes to the department in the last 19 months.

After about an hour and half of discussion, the committee voted down a motion to sponsor the bill during the 2013 session.

But after the 4-to-7 vote, state Sen. Charles Scott, R-Casper, said he will individually sponsor the bill if he is reelected this fall.

"I have heard from a fair amount of people who have had complaints with insurance companies," Scott said. "The courts are not an effective remedy at the level of complaint that people typically have.

"There is not enough money at stake to hire an attorney, and this comes as legal fees become more and more expensive."

Other members of the committee argued the bill was overly regulatory.

"This is a hammer that is just not needed," said Rep. Pete Illoway, R-Cheyenne, who co-chairs the committee. "I don't think it is necessary in the state, and I don't think it is a bad thing to just go to court."

Several insurance lobbyists joined in opposition during public testimony.

Cynthia Pomeroy, representing WinHealth Partners and the Mountain West Farm Bureau Mutual Insurance Company, said the state has other tools to help consumers.

Also, she said, the bill goes against the state's business-friendly reputation.

"I really do think this does create more regulatory burden," she added.

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