Restore Balance Solution

Insurance

West Virginia is continuing to enact much needed reforms in its insurance laws so that these are in step with the nation.  Reforms enacted in 2004 and 2005 should help to re-open the state's insurance marketplace, provide more coverage options and lead to lower overall insurance costs for businesses, homeowners and auto owners.

Bills enacted in 2005:

• Third-Party Disputes – S.B. 418

• Joint and Several Liability – S.B. 421

• Deliberate Intent – S.B. 744

• Right to Cure -- S.B. 456

• Commercial Insurance Reforms – S.B. 30

• Innocent Prescriber -- H.B. 2011

• Physician Dialogue Provision - H.B. 3174 (provides that expressions of apology, responsibility, sympathy, condolence or a general sense of benevolence made by a health care provider to a patient shall be made inadmissible as evidence of admission of liability) 

Background

The predicament has been costing West Virginians dearly.  Insurance premiums for homeowner's and auto insurance are significantly higher than in surrounding states.  Also, the state has the second highest premium tax rates in the nation, and these rates go directly to the cost of insurance.

Presentation:  West Virginia Insurance Commission, September 2003

State-by-State Comparisons - Auto Insurance Premium Expenditures

Source: http://moneycentral.msn.com/content/Insurance/Insureyourcar/P88635.asp

Auto Premium Rates Land W.Va. 16th, Study Shows
The Register-Herald, Oct. 23, 2004

West Virginians are being hurt due to a property and casualty insurance crisis. West Virginia businesses are having more and more difficulty finding affordable commercial property and casualty insurance coverage for their businesses. Likewise, the employees of these businesses are also having more trouble obtaining personal insurance for their automobiles and homes at an affordable price.

West Virginia’s property and casualty insurance crisis can, in part, be attributed to the fact that West Virginia is not in the mainstream with respect to its laws that regulate insurance. One of the laws unique to West Virginia includes allowing third-party lawsuits against insurers for alleged violation of the Unfair Trade Practices Act and Unfair Claims Settlement Practices Act. West Virginia is one of only six states that allows this. This right was not created by the Legislature, but by the Supreme Court.  In other states, these actions are brought by the Insurance Commission.  There are no policy limits in a third-party lawsuit; the injured party is effectively seeking punitive damages.  Accordingly, the company’s assets are at risk in each such lawsuit.   

Bad Faith Suits

Insurance Commission: ‘Time To End Third-Party Lawsuits’

The West Virginia Insurance Commission issued a report in early  February 2005 that calls for the elimination of third-party bad-faith lawsuits in West Virginia .  This recommendation is in line with a long-running policy position of the West Virginia Chamber of Commerce.   “Legal analysis indicates that West Virginia is in the decided minority in its approach to the third party doctrine,” the commission’s report reads.  “The economic consequences of this law are formidable.”

West Virginia is one of only six states that allows an individual to bring a third-party action against an insurance company for alleged violations of the Unfair Trade Practices Act, the report notes. “This right was not created by the Legislature but by the West Virginia Supreme Court,” said Brenda Nichols Harper, Vice President and General Counsel for the West Virginia Chamber. “In other states, these actions are brought before the Insurance Commission as an administrative action,” she explained.  “There are no policy limits in a third-party lawsuit. The injured party may receive punitive damages.  Accordingly, the company’s assets are at risk in each such lawsuit,” she continued.

“ West Virginia needs to enact legislation to address third party bad faith, and we are pleased that the state Insurance Commission views this the same.”

Click to read the entire report:  www.wvinsurance.gov/reports/pdf/third_party_causes_action_effects.pdf

Articles:

Commentary: John Canfield
Trial lawyers misrepresent third-party lawsuit reforms
The Charleston Gazette, March 4, 2005

Editorial: Insurance
Proposed reforms could ease burden on home, vehicle owners
The Register-Herald, August 27, 2004

Lawmakers Hold Meeting About State's Latest 'Crisis'
The Register-Herald, August 25, 2004

Editorial: West Virginia Must Focus On Insurance Reform
The Herald-Dispatch, August 21, 2004

Officials: Fire Losses Main Reason For Expensive Insurance
The Register-Herald, August 18, 2004

Home Insurance Still On The Rise
Bad weather and West Virginia laws blamed for increases in rates
The Herald-Dispatch, August 17, 2004

State’s Auto Insurance Rates Rising Faster Than Most
The Charleston Gazette, July 19, 2004

Insurance Crunch Hits Local Firm
Parkersburg News-Sentinel, July 10, 2004

Liability Insurance Generates Sparks
Mining equipment repair company has seen huge jump in its premiums
Charleston Daily Mail, April 19, 2004

Solution:

West Virginia needs legislation that will bring our state into the mainstream with respect to insurance laws.  Such legislation must include reforms to commercial property insurance and legislation to address third party bad faith.