Rates Down, Complaints Up After Insurance Suit Ban

The Charleston Gazette, October 4, 2005

Insurance rates are coming down and third party complaints are going up after a new law banning a certain type of lawsuit went into effect in July. Auto insurers have asked for $63 million in rate decreases and homeowner insurers have requested another $3 million in reductions, Insurance Commissioner Jane Cline told lawmakers Monday.

Meanwhile, the Insurance Commission has received 83 third-party complaints since the law went into effect July 8. Twenty-nine people filed third-party complaints during the same period last year.

State Farm, the nation’s largest auto insurer, has asked for a 10 percent reduction in West Virginia, a bigger reduction than any other state, Cline said. Erie Insurance has filed for a total of three rate decreases to take effect in the next several months.

Cline credited the rate reductions to the Legislature’s elimination of third-party bad faith lawsuits, not to the improving insurance market nationwide. She said the increase in complaints was expected, because now the state Insurance Commission is the only place to make third-party claims.

Also, three auto insurance companies have dropped a total of 100 customers based on new “easy-drop” legislation passed in 2004, Cline said. That’s actually fewer than they dropped in the past, and they could have dropped more than 3,500, she said.

Some insurance customers have not seen their rates drop yet because the reductions are being considered and because rate reductions only take place when the policy is renewed, Cline said.

Sen. Frank Deem, R-Wood, said lawmakers were not receiving enough credit for the rate reductions in the media. “We never read how great this Legislature has done about addressing this problem,” Deem said.