The Property Casualty Insurers Association of America issued a statement concerning two constitutional initiatives, titled “Question 4” and “Question 5,” that are
supported by trial lawyers and will be on the November 2, 2004 ballot in Nevada:
The initiatives attack insurance companies and Nevadans who want to reform Nevada’s civil justice system. Among other things, the initiatives would require insurance companies to cut their rates by 20 percent and prevent the Legislature from passing bills that limit damage awards or lawyer contingency fees. Because both initiatives seek to amend the Nevada Constitution, they must be approved by the voters at both the November 2004 election and the November 2006 election.
Keep Our Doctors in Nevada (KODIN), a group supported by the Nevada medical association, has qualified a statutory initiative for the November 2, 2004 ballot. The initiative would strengthen existing limitations on noneconomic damages and lawyer contingency fees in medical malpractice cases. The KODIN initiative is opposed by Nevada trial lawyers.
Earlier this year, the trial lawyers determined that a straight opposition campaign to defeat the KODIN initiative was probably doomed. The lawyers decided to try to negate the KODIN initiative in a roundabout manner by running a campaign for initiatives directed at insurance companies and frivolous lawsuits and burying in the initiatives provisions that would undermine the KODIN initiative and remove limitations on damage awards and lawyers fees.
The trial bar secured enough signatures to qualify two initiatives for the November 2, 2004 ballot that undermine the KODIN initiative.
The following is a summary of the two initiatives:
· The initiative would generally apply to all lines of insurance except life, health, workers’ compensation and disability insurance.
· Insurers would be required to reduce their rates by 20%.
· The 20 percent rollback would be in place for one year.
· During the one year rate freeze, an insurer woul be able to petition the insurance commissioner for a rate increase. The insurer would have to prove that the 20 percent rate reduction deprives the insurer of a fair and reasonable rate of return.
· Motor vehicle insurers would have to provide a 20 percent good driver discount. The definition of “good driver” is set forth in the initiative.
· Insurers would be subject to state anti-trust laws.
· The cost of administering the initiative’s provisions would be paid for by fees imposed on insurance companies.
· Consumer advocates appointed by the Legislature would have the right to participate in hearings on insurance rate filings.
· Insurance rates would be subject to strict prior approval. On reviewing a rate filing, the insurance commissioner would be prohibited from giving any consideration to the degree of competition in the insurance market. Hearings would have to be held on proposed rate changes of 7 percent for personal lines or 15 percent for commercial lines. A hearing on a proposed rate would also have to be held at the request of a member of the public, with some limitation.
· Statutory limitations on medical malpractice awards would be repealed unless the insurance commissioner determines that medical malpractice premiums have been reduced by 10 percent.
· An attorney who has willfully pursued frivolous litigation would be personally responsible for the aggrieved party’s attorney’s fees.
· The Legislature would be prohibited from enacting laws that limit damage awards.
· The Legislature would be prohibited from enacting laws that limit attorney’s fees.
The Business Community Strikes Back
Nevadans Against Frivolous Lawsuits has mounted a campaign to defeat the initiatives. PCI and several PCI member companies have joined the campaign. The campaign’s Web site is www.no4and5.org. If you want more information on the effort to defeat these proposals, contact Sam Sorich at (916) 449-1370 or Samuel.Sorich@pciaa.net.
PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write $154 billion in annual premium, 38 percent of the nation’s property/casualty insurance. Member companies write 47.1 percent of the U.S. automobile insurance market, 37 percent of the homeowners market, 31.2 percent of the commercial property and liability market, and 38.8 percent of the private workers’ compensation market.
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