PCI: Collaborative Effort Yields Positive Results for Insurers in Washington

April 29, 2005

Despite early signs that the 2005 session of the Washington Legislature would impose a series of costly and burdensome measures on the insurance market, the Property Casualty Insurers Association of America (PCI) saw the most threatening measures evaporate by the time the session’s final gavel fell on April 24.

Kenton Brine, PCI’s Olympia-based regional manager, attributed the positive results to a collaborative effort by the state’s insurers and agent groups that helped make legislators aware of the negative impact of several key measures.

“By working in a coordinated and cohesive effort the industry harnessed its political potential to defeat anti-insurance legislation and promote measures we believe will help insurance consumers in this state,” Brine said.

Lawmakers came to Olympia in January facing a potential $1.6 billion revenue shortfall and a still-sluggish economy, and to a statehouse and governor’s office controlled by one political party. Insurers were concerned that challenges posed by the budget and by insurer adversaries in the plaintiffs’ bar might lead to higher taxes and more mandates or restrictions on companies.

“There were concerns that a competitive insurance marketplace might be damaged by excessive taxation or additional regulation,” said Brine. “But though several measures were introduced that would have been harmful to insurers and consumers, legislators in most cases heard the arguments advanced by PCI and our colleagues in the industry and turned back the worst of the bills introduced.”

Lawmakers rejected measures that would have:

• Banned the use of credit histories in insurance rating (HB 1927, SB 5328. Both bills died in committee).

• Prohibited insurance carrier ownership interest in auto body repair shops (HB 1620, HB 2050. Both bills died in House Financial Institutions and Insurance Committee).

• Restricted underwriting consideration of dog breeds in homeowners’ policies (HB 1016 died in Senate Financial Institutions, Housing and Consumer Protection Committee)

• Overturned recent state Supreme Court rulings in the Phillipides and Otani cases and significantly expanded damages available in wrongful death actions (SB 5734 died in Senate Judiciary Committee);

• Established a new “no-fault” compensation system for birth-related injuries that relied on new assessments on property/casualty insurers (up to 1/4th of 1 percent of total premiums) for funding (HB 1859 died in the House Judiciary Committee);

• Eliminated the statute of repose (statute of limitations) on residential construction claims (HB 2004 died in House Rules Committee).

PCI also supported one of the few tort reform measures to pass the Washington Legislature this year, HB 1625. The bill was recently signed into law by Gov. Christine Gregoire and protects employers who provide employee references from civil liability.

Brine noted that PCI led industry efforts to enact measures supported by Insurance Commissioner Mike Kreidler. PCI helped negotiate improvements to a measure to establish a separate account for U.S. Longshore and Harborworkers Compensation within the Washington Insurance Guaranty Association and supported a bill to protect the confidentiality of certain insurance examinations conducted by the Office of Insurance Commissioner.

“Thanks to a well coordinated political effort, insurers enjoyed a successful session in a challenging environment,” said Brine. “Insurers, agents and consumers have been well-served by those efforts.”

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