HB 3314 Text

H. B. 3314

(By Delegates Miley, Manchin and Rick Thompson)
[Introduced March 25, 2005; referred to the
Committee on Banking and Insurance then the Judiciary.]

A BILL to amend the Code of West Virginia, 1931, as amended, by adding thereto a new article, designated §33-49-1, §33-49-2, §33-49-3, §33-49-4, §33-49-5, §33-49-6, §33-49-7 and §33-49-8, all relating to insurance company rates generally; listing certain legislative findings; including various types of insurance; providing for a mandatory rate rollback with specific percentages; providing for administrative relief; exempting certain lines; limiting duration of rollback; allowing Commissioner of Insurance to modify rate reductions; and requiring the Commissioner of Insurance to make certain findings and recommendations.

Be it enacted by the Legislature of West Virginia:
That the Code of West Virginia, 1931, as amended, be amended by adding thereto a new article, designated article §33-49-1, §33-49-2, §33-49-3, §33-49-4, §33-49-5, §33-49-6, §33-49-7 and §33-49-8, all to read as follows:
ARTICLE 49. INSURANCE RATE ROLLBACK.
§33-49-1. Findings.
The Legislature finds that:
(a) The cost of litigation against people who are insured and their insurers, has been a significant factor in the high cost of certain lines of insurance;
(b) Legislation enacted by the seventy-fifth and seventy-sixth regular sessions of the Legislature, both with regard to "appropriately adjusted" premiums of property and casualty insurance generally and civil actions pertaining to medical malpractice claims in particular was intended to meaningfully reform the civil justice system and will result in decreases in both the frequency and severity of the litigation;
(c) While the monetary effect of these legislative changes can be actuarially determined within a reasonable degree of certainty, insurers will delay implementation of rate reductions until they have data showing actual loss experience;
(d) The delay described by subdivision (b) of this section will result in a windfall for the insurers benefitted by the legislation described by subdivision (a) of this section, and this benefit should be passed on to people insured; and
(e) Legislative action in the public interest and within the police power of the state is required to eliminate unnecessary delays to pass these benefits on to the insured public of this state.
§33-49-2. Scope of article.
(a) This article applies to any insurer authorized to do business in this state and that is authorized to write any of the types of coverages or lines and sublines listed in subsection (b) of this section, including:
(1) A capital stock company;
(2) A mutual company; and
(3) A reciprocal or interinsurance exchange.
(b) This article does not apply to Farmers' Mutual Fire Insurance Companies organized under article twenty-two of this chapter.
(c) This article applies only to policies or coverages in the following lines or sublines that are issued, issued for delivery, or renewed on and after the first day of January, two thousand five:
(1) Professional liability insurance for a physician, other healthcare provider, or hospital;
(2) Commercial liability insurance for damages arising out of the manufacture, design, importation, distribution, packaging, labeling, lease or sale of a product or for completed operations coverage;
(3) Private passenger automobile liability insurance for bodily injury;
(4) Commercial automobile liability insurance for bodily injury;
(5) Private umbrella and excess liability insurance;
(6) The liability portion of commercial multiperil insurance;
(7) The liability portion of homeowner's and renter's
insurance;
(8) Employer's liability and stop gap insurance; and
(9) Other commercial liability insurance, including the following lines and sublines:
(A) Premises medical;
(B) Fire legal liability;
(C) Personal advertising injury;
(D) Contractual liability;
(E) Liability for all premises;
(F) Pollution liability;
(G) Owners and contractors protective liability;
(H) Railroad protective liability;
(I) Liquor liability;
(J) Commercial umbrella and excess liability;
(K) Professional liability other than insurance described by subdivision (1) of this subsection; and
(L) Garage liability.
§33-49-3. Rate rollback.
(a) Notwithstanding the fixed percentages set forth in subsection (b) below, insurers for any given line of insurance may, collectively, request a public hearing before the Commissioner, at which designees of the Commissioner and the public may ask questions, for the purpose of either increasing or decreasing the fixed percentage set forth in subsection (b). If the Commissioner shall find, based upon evidence adduced at the hearing and set forth in the transcript thereof, that the fixed percentage is not appropriate, then the Commissioner may substitute, by order, such percentage as then appears fair and just.
(b) Absent a finding and order as set forth in subsection (a)above, then the percentage reduction shall be as follows:
Line or Subline

Percentage Reduction

(1) Professional liability insurance
for a physician, other health care provider,
or hospital:

30%

(2) Commercial liability insurance for
damages arising out of the manufacture,
design, importation, distribution, packaging,
labeling, lease, or sale of a product or for
completed operations coverage:

15%

(3) Private passenger automobile
insurance for bodily injury:

25%

(4) Commercial automobile liability
insurance for bodily injury:

20%

(5) Private umbrella and excess liability
insurance:

20%

(6) The liability portion of commercial
multi-peril insurance:

10%

(7) The liability portion of homeowner's
and renter's insurance:

5%

(8) Employer's liability and stop gap
insurance; and

10%

(9) All lines and sublines of other
commercial liability insurance:

15%

(c) Any order of the Commissioner which determines, approves, or sets a rate reduction under this section and is appealed or challenged shall remain in effect during the pendency of the appeal or challenge. During the pendency of the appeal or challenge, an insurer shall use the rate reduction provided in the order being appealed or challenged. The rate reduction is lawful and valid during an appeal or challenge. The Commissioner shall consider the effect of the legislation described by section one of this article in determining rates under subsection (a) of this section.
§33-49-4. Administrative relief.
(a) Any rate filing seeking an effective date on and after
the effective date of this article shall reflect the reductions in accordance with section three of this article, and any contrary rate filing shall be disapproved except as indicated in subsection (b) of this section.
(b) The Commissioner is not required to disapprove a rate filing that reflects less than the full amount of the rate reduction imposed by section three of this article if:
(1) The Commissioner determines that, based on clear and convincing evidence, an insurer will be financially unable in a particular line of insurance to continue writing that line; or
(2) The rate reduction required by section three of this article would likely result in placing the insurer in a hazardous financial condition described by section three, article thirty-four (a) of this chapter.
§33-49-5. Declaration of inapplicability to certain lines.
The Commissioner shall, by order, declare this article inapplicable to a line or subline of insurance otherwise subject to this article at the time the Commissioner finds, based on actuarially credible data, that rates in that line or subline reflect the actual experience under the legislation described by section one of this article.
§33-49-6. Duration of reduction.
Unless the Commissioner grants relief under section four or five of this article, each rate resulting from the reduction required under section three of this article remains in effect until the first day of January, two thousand seven.
§33-49-7. Modification.
The Commissioner may, by order or informational letter, based on the evidence accumulated by the Commissioner before the order or informational letter is issued, modify a rate reduction mandated by the Commissioner under this article if a final, unappealable judgment of the West Virginia Supreme Court of Appeals with appropriate jurisdiction stays the effect of, enjoins, or otherwise modifies or declares unconstitutional any of the legislation described by section one of this article on which the Commissioner based the rate reduction.
§33-49-8. Report and recommendations to the Legislature.
The Commissioner shall assemble information, conduct hearings, and take other appropriate measures to assess and evaluate changes in the marketplace resulting from the implementation of this article and to report the findings and make recommendations to the Legislature prior to the December interim meeting for each year during the effective dates of this article.

NOTE: The purpose of this bill is to require that insurance rates be rolled back by specific percentages. The bill provides for administrative relief and certain lines are exempt. The rollback is limited in duration and the Commissioner of Insurance may modify rate reductions for hardship.

This article is new; therefore, strike-throughs and underscoring have been omitted.

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