H. B. 4579
(By Delegates H. White, Kominar, Perdue,
R. M. Thompson, Hrutkay and Amores)
[Introduced
February 20, 2004
; 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 º33-47-1, º33-47-2,
º33-47-3, º33-47-4, º33-47-5, º33-47-6, º33-47-7 and º33-47-8,
all relating to insurance generally; and providing a new
procedure for rolling back insurance rates.
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 º33-47-1, º33-47-2,
º33-47-3, º33-47-4, º33-47-5, º33-47-6, º33-47-7 and º33-47-8, all
to read as follows:
ARTICLE 47. INSURANCE RATE ROLLBACK.
º33-47-1. Findings.
The Legislature finds that:
(a) The cost of litigation against insurers and their insured
individuals has been a significant factor in the high cost of certain lines of insurance;
(b) Recently enacted legislation including the provisions of
chapter one hundred seventy-four, acts of the Legislature, regular
session, two thousand two, chapter nineteen, acts of the
Legislature, sixth extraordinary session, two thousand one, and
chapter one hundred forty-seven, acts of the Legislature, two
thousand three, regarding appropriately adjusted premiums of
property and casualty insurance generally and civil actions
pertaining to medical malpractice claims in particular was intended
to reform the civil justice system and result in decreases in both
the frequency and severity of such litigation;
(c) While the monetary effect of the legislative changes can
be actuarially determined within a reasonable degree of certainty,
insurers delay implementation of rate reductions until they have
data showing actual loss experience;
(d) The delay described by subdivision (c) of this section
will result in a windfall for insurers and this benefit should be
passed on to the people they insure; and
(e) It is in the public interest to eliminate unnecessary
delays in passing these savings and benefits on to the insured
public of this state.
º33-47-2. Scope of article.
(a) This article applies to any insurer that is authorized to do business in this state and that is authorized to write any of
the types of coverages or lines and sub-lines listed in subsection
(b) of this section, including:
(1) A capital stock company;
(2) A mutual company; and
(3) A reciprocal or inter-insurance 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 sub-lines that are issued, issued for delivery,
or renewed on and after the first day of July, two thousand five:
(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.
º33-47-3. Rate rollback.
(a) Notwithstanding the fixed percentages set forth in
subsection(b) below, insurers for any given line of insurance may,
collectively, request an increase or decrease to the fixed
percentage set forth in that subsection. Upon receipt of the
request, the commissioner shall schedule a public hearing before
the commissioner on the request. At the public hearing, the
commissioner or his or her designees and the public may ask
questions and provide testimony and evidence. The commissioner
shall ensure that a complete record of the hearing is made. If the
commissioner finds, based upon evidence adduced at the hearing and
set forth in the transcript of the hearing, that the fixed
percentage is not appropriate, then the commissioner may
substitute, by order, a percentage as the commissioner determines
to be appropriate taking into consideration the best interests of
the public.
(b) Absent a finding and order as set forth in subsection (a)
of this section, the percentage reduction shall be as follows for:
(1) Professional liability insurance for a physician, other
health care provider, or hospital, the percentage reduction is
thirty percent;
(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 the percentage reduction is fifteen percent;
(3) Private passenger automobile liability insurance for
bodily injury, the percentage reduction is twenty-five percent;
(4) Commercial automobile liability insurance for bodily
injury, the percentage reduction is twenty percent;
(5) Private umbrella and excess liability insurance, the
percentage reduction is twenty percent;
(6) The liability portion of commercial multi-peril insurance
the percentage reduction is ten percent;
(7) The liability portion of homeowner's and renter's
insurance, the percentage reduction is five percent;
(8) Employer's liability and stop gap insurance, the
percentage reduction is ten percent; and
(9) All lines and sublines of other commercial liability
insurance, fifteen percent.
(c) Any order of the commissioner which determines, approves,
or sets a rate reduction under this section and is appealed or
challenged shall be and 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. Such rate reduction shall be
lawful and valid during such appeal or challenge.
(d) 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.
º33-47-4. Administrative relief.
(a) Any rate filing on or after the effective date of this
article shall reflect the reductions in accordance with section
three of this article, and any rate filing not in conformity with
section three of this article shall be disapproved except as
provided 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 two, article thirty-four-a
of this code.
º33-47-5. 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.
º33-47-6. 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.
º33-47-7. 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.
º33-47-8. 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 first day of December of each year.
NOTE: The purpose of this bill is to establish a new
procedure for rolling back insurance rates.
This article is new; therefore strike-throughs and
underscoring have been omitted.
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