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West Virginia Auto & Homeowners Insurance Companies Benefit From The 2005 Law

West Virginia Auto & Homeowners Insurance Companies Benefit From The 2005 Law

Wednesday’s Post 11/30/11 -   A report recently issued by the Insurance Research Council (IRC) stated that auto and home insurers were able to save $200 million during the first five years after this new law was enforced. This provision was made under the Bad faith Act prohibiting third parties from making further claims in cases where they felt that the insurer was had made an unfair settlement. An alternative was given in such cases where the claimants are required to file a complaint to the Insurance commissioner. The state officials are mandated by law to conduct an investigation into the claims. If the claimant’s grievances are verified to be true the state imposes fines on the insurers. The Act gave the state commission authority to determine the economic damage to be awarded to third parties. The insurers may be required to pay up to a figure of $10,000 to the offended party. This legislation has brought about changes; the IRC has reported that injury claims have reduced significantly over the past five years. During 2000 to 2004 loss costs in West Virginia were 47 percent above the national average figure. However, in 2010 this figure dropped to 7 percent above the national average. IRC officials think that the drop is as result of a reduction of bodily injuries reported. The reports are an indicating that the 2005 law has taken effect, with claims having dipped by 8% from 2006 to 2010. Other states have not registered the same results as there is a steady increase of these claims. The findings clearly depict that the law has had a positive impact on settlement process .A senior official of IRC stated that other legislators should borrow a leaf and enact similar reform in their states. This move by West Virginia officials was driven by the fact that there were many claims which were causing an increase in premiums which even top motor insurance firms had to impose. Regulators have praised this law because it has caused rate reductions and a 9.8% premium cost drop which was achieved after a period of one year. This is indeed a course for celebration among West Virginia insurers.

-Mike

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
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