Editorial: West Virginia Must Focus On Insurance Reform

The Herald-Dispatch, August 21, 2004

West Virginians file several claims in the first few years that they have insurance, they risk having that insurance cancelled, even if their claims are small and perfectly legitimate.

The reason: West Virginia law doesn’t allow an insurance company to drop a policyholder if he or she has been with the company for more than four years. So, as might be expected, the company keeps a wary eye on new policyholders.

If it appears they may have a pattern of submitting frequent claims -- maybe legit, maybe not -- then the company wants to drop them while it can, before it gets stuck and can’t get rid of them.

That’s just one of a number of laws that, if revised, could do much to tame the runaway rates being charged many West Virginians for their homeowners insurance.

Here’s another: A law that requires an insurer to pay the full replacement cost of a home destroyed by a fire even if the home has deteriorated and wasn’t worth the assessed value.

West Virginia urgently needs sweeping insurance reform, from top to bottom.

The current situation serves no one’s interest -- not the public that’s finding it harder and harder to obtain affordable insurance or the insurance companies that are racking up record losses on their West Virginia business.

Actually, that statement’s not entirely correct. The current situation <I>doe</I>s benefit at least one group: Those bent on committing insurance fraud, who have learned exactly how to work the system, lining their pockets at the expense of both the insurance companies and the state’s honest policyholders.

The Legislature’s creation of an insurance fraud unit -- the state’s first ever -- earlier this year was an important step in the right direction, but only a start at what needs to be done.

We urge West Virginia ’s next governor and next Legislature to put insurance reform at or near the top of their 2005 agenda.