W. Va. Insurance Federation Supports Repeal of Third Party Causes of Action

The West Virginia Insurance Federation has announced that its members have endorsed the findings of a recently released West Virginia Insurance Commission report calling for elimination of private third party cause of action lawsuits brought under the Unfair Trade Practices Act.

“The Insurance Federation commends the Insurance Commission for its year-long legal and economic analysis of this issue,” Jill C. Bentz, WVIF president said. “The report confirms what our membership has been saying for years that third party lawsuits result in larger premiums for West Virginia policyholders.”

Bentz said the WVIF is also heartened by comments made by newly elected Gov. Joe Manchin in his State of the State address on Feb. 9, in which he called for an end to frivolous lawsuits in the state.

“Gov. Manchin clearly recognizes that the West Virginia civil justice system is out of step with the rest of the country and that it needs to be reformed,” Bentz said, noting that preliminary results from a survey by a Charleston-based research firm found that nine out of 10 West Virginia citizens thought third party actions create incentives for unjust lawsuits. The full findings of the statewide poll will be released next week.

The Insurance Commissioner’s report came as the result of legislation enacted in 2004 (House Bill 4004) that required the state agency to study and report on the legal and economic consequences of West Virginia’s third party cause of action and the resulting effects on insurance rates and availability.

Bentz said the Insurance Commission’s report concluded that the state’s legal protections of the third party rights in an insurance context give protections that are beyond the original intent of the UTPA, forcing insurers to take on “a practice of defensive claims settlement practices and spending a much higher than average effort defending themselves in court.”

“The report shows that West Virginia has higher bodily injury claim costs when compared to non-third party states,” Bentz said. “These private cause of actions cost $166.7 million per year.”

Bentz said her members agree that the Insurance Commission has the administrative authority, plus the specialized skills and knowledge about insurance transactions to mediate in cases involving third-party claimants.

WVIF represents both domestic and foreign property/casualty insurers who collectively write most of the auto, homeowner’s and commercial policies in the state.

Topics Virginia West Virginia