This story originally provided by The Charleston Gazette

March 1, 2005

State can defend public, insurance chief says

By Scott Finn
Staff writer

State Insurance Commissioner Jane Cline says her office can be trusted to defend consumers against misbehaving insurance companies if the Legislature eliminates third-party bad-faith lawsuits.

Cline spoke Monday at the Professional Independent Insurance Agents of West Virginia conference in Charleston.

“I think it’s a misnomer to say that the Insurance Commission would do nothing to companies that act in bad faith, because we do,” she said.

Last year, she said, her office received 975 complaints, of which 51 involved third parties. The Insurance Commission did not fine the company in any of those 51 cases, she said, but instead worked with them to negotiate a settlement.

“Is it in the best interest of the policyholder that we levy a huge fine against the company or work with the company to turn them around?” Cline asked.

Gov. Joe Manchin said Thursday he is drafting legislation to eliminate third-party bad-faith lawsuits. But what are they?

Say a drunken driver plows into your car. That driver’s insurance company should pay your bills.

If the insurance company makes a lowball offer, you can sue them for dealing with you in bad faith.

In 44 other states, you would not be able to sue right away. You would file a complaint with the state Insurance Commission, which could fine the company. That’s the system Manchin wants in West Virginia.

In return, insurance companies have promised to roll back premium rates by $50 million, Manchin said.

Trial lawyers question whether the insurance companies can be trusted to keep that promise.

At a debate sponsored by the insurance agents after Cline’s speech, Morgantown trial lawyer Al Karlin called for legislation mandating a 5 percent to 10 percent rollback in exchange for eliminating the lawsuits.

“We don’t believe you can trust insurance companies on a handshake,” Karlin said.

Cline said her office, through its rate-making authority, can hold companies to their word.

Lawyer Marc Williams of Huntington, who represents insurance companies, said he would trust the Insurance Commission more than “six people who couldn’t figure out how to get out of jury duty.”

To contact staff writer Scott Finn, use e-mail or call 357-4323.