NAII Says Insurers Faced Stiff Opposition in

Insurers faced some stiff opposition in the recently concluded Washington legislative session according to the National Association of Independent Insurers (NAII). Insurers succeeded in improving the initial version of credit-based insurance score legislation but the final product still is likely to deprive many consumers of the benefits that those scores can offer, according to the NAII.

NAII Northwest Regional Manager Michael Harrold said a major accomplishment was having removed from insurance score legislation, House Bill 2544 and Senate Bill 6524, a provision setting a 20 percent cap on the differential in an insurer’s rates based on insurance scores. A substitute version of HB 2544 passed both chambers and was sent to Gov. Gary Locke for his anticipated signature.

“Restrictions that HB 2544 imposes on insurers’ use of credit-based insurance scores undermine much of the value that those scores otherwise could offer to most consumers,” Harrold said. “When insurers are free to use those scores as their experience dictates is most appropriate, they can provide insurance to more people at a lower cost to most consumers. Moreover, people who are low risks don’t subsidize higher risks. That is fairest for everyone.”

Much of the legislators’ attention during the 2002 session was focused on a budget crisis brought on by falling revenues and increasing costs. Insurers, agents, brokers and business interests were able to avoid any direct increases in business taxes, “but it was a close call,” Harrold noted.

Insurers did take an indirect hit when legislators tapped into the Insurance Commissioner’s Regulatory Account and transferred $366,000 from the account to the State General Fund. The Insurance Commissioner’s Regulatory Account is funded entirely by fees paid by insurers and others regulated by the Office of the Insurance Commissioner, and it is intended to be used for the purpose of providing appropriate regulation. These fees are in addition to premium taxes, which go directly into the State General Fund.

Another bill passed by the legislature that could be detrimental to consumers was SB 5373, which may put pressure on defendants to settle at higher levels when a mandatory arbitration case is appealed. The bill will allow a non-appealing party who makes a compromise offer to have the offer, rather than the arbitrator’s award, stand as the new benchmark for determining improvement of position if the appeal continues.

Other legislation passed during the session included:

SB 6481, establishing a limited license for rental car companies to provide various insurance programs to their customers.

SB 6490, raising the penalties for auto theft.

SB 6530, a compromise salvage titling bill supported by NAII that seeks to identify older cars that should have their titles branded as salvage due to significant damage without impairing the value of cars that are fully repairable.

HB 1460, allowing police to stop a vehicle and issues tickets for failing to buckle up a seatbelt even if no other traffic violations occurred.

SB 6409, giving builders an opportunity to cure a construction defect before a lawsuit can be filed.

Bills that died during the session included:

SB 5028, which would have shifted the burden of proof regarding reasonable and customary medical fees to healthcare providers instead of the individuals protesting the fees. NAII and other insurers opposed the bill, which was supported by the state Trial Lawyers Association.

SB 6525, which was opposed by the NAII and would have banned the sale of single-premium credit insurance policies associated with a mortgage loan in Washington. In declining to approve the bill prior to the March 8 cut-off deadline, some House members expressed concern that the bill would deny insurance choices to consumers.

House Bill 1118, on the use of cameras to identify motor vehicles that run red lights, railroad crossing barricades or violate speeding laws.

Topics Carriers Legislation