W. Va. Homeowners, Auto Rates Reduced Dramatically Due to Legislative Changes

Automobile and homeowners insurance rates have been reduced as a result of key legislative changes made in the West Virginia Legislature, Jane L. Cline, Insurance Commissioner, told Professional Independent Insurance Agents of West Virginia members during the group’s 106th annual convention in Shepherdstown, V.Va.

The commissioner gave a Powerpoint presentation outlining specific legislative changes and how it has affected insurance rates in West Virginia. Cline said she would be meeting with the Select Committee on Insurance Availability and Affordability to discuss major changes in rates that came about due to the legislature’s elimination of third-party bad-faith lawsuits.

Cline explained that third-party bad faith lawsuits allowed trial lawyers to sue insurance companies for their entire assets. She said that due to legislation passed in the 2005 legislature, she now 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.

Cline described key changes that took place in 2005, including: Joint-and-several liability, for defendants found 30 percent or less at fault, their liability is several and not joint; and 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 have filed for more than $66 million in reductions: $65 million for auto and $2.8 million for homeowners. Cline said that adjusting for inflation and effective date the relief will even be greater.

Cline presented carrier’s auto insurance figures indicating that State Farm had agreed to reduce its premiums by $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.

The commissioner said she expects other carriers to follow suit. West Virginia’s market now sees more new product development, competition is improving services and companies are accepting new business. She suggested, however, that effects will not be uniform for all insureds across all lines of insurance. Liability insurance is affected more than property insurance.

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