W. Va. Legislation Effectively Reduced Homeowners, Auto Rates

Automobile and homeowners rates have been dramatically reduced as a result of legislative changes made by the West Virginia Legisla-ture, Insurance Commissioner Jane L. Cline, told Professional Independent Insurance Agents of West Virginia during the group’s 106th annual convention in October.

Commissioner Cline gave a presentation in which she outlined legislative changes and how they affected insurance rates in West Virginia. Cline said major changes in rates came about due to the legislature’s elimination of third-party bad-faith lawsuits.

She explained that third-party bad faith lawsuits permitted trial lawyers to sue insurance companies for their entire assets. Due to legislation passed in the 2005 legislature, Cline has the power to determine if an insurance company has acted in bad faith and thus in most cases the suits have been removed from West Virginia’s court system.

She described two key changes that took place in the 2005 Legislature, including:

1) Joint-and-several liability, for defendants found 30 percent or less at fault, their liability is several and not joint; and

2) Homeowners non-renewal follows the design of auto non-renewal legislation of 2004, with early evidence from auto carriers showing wider carrier choice in non-renewal decisions is not creating an availability problem.

Carriers have filed rate decreases and Cline said Governor Joe Manchin III received commitments for $50 milllion, while carriers filed for the following reductions: $65 million for auto and $2.8 million for homeowners. Cline said that after adjusting for inflation based on the effective date, the relief will
actually be even greater.

Cline presented auto insurance figures showing that State Farm has agreed to reduce its premiums $34.4 million; Nationwide, $11.5 million; Erie, $6.1 million; Allstate, $4.9 million; Westfield, $1.9 million; GEICO, $0.3 million; and others $4.1 million.

Cline expects other carriers to follow suit. “West Virginia’s market now sees more new product development, competition is improving service and companies are accepting new business,” Cline said. She predicted effects will differ depending on the type of insurance with a greater effect on liability than property insurance.

The commissioner said not all policy holders will experience a rate reduction because no all companies agreed. She said 74 percent of the personal auto market and 24 percent of the homeowner market agreed to a rate reduction. She also said that some consumers might see increased premiums due to circumstances, such as accidents and violations.

West Virginia Insurance Commissioner Cline

Topics Carriers Auto Legislation Pricing Trends Virginia Homeowners West Virginia