H. B. 2414
(By Delegate Miley)
[Introduced January 23, 2007; referred to the
Committee on Banking and Insurance then Finance.]
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 §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
seven:
(1) Professional liability insurance for a physician, other
health care 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 subsection (a), section three,
article thirty-four 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 eight.
§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.