This story originally provided by The Charleston Gazette

June 22, 2005

Schnookered again

West Virginia made bad trade

INSURANCE executives all over the country must be laughing about West Virginia.

During the legislative session, Gov. Manchin and Insurance Commissioner Jane Cline traded away West Virginians’ right to sue over third-party bad faith. Starting in July, under West Virginia law, if somebody hits your car, and your Blue Book value is $10,000 but the other driver’s insurance company says, “Tough. All we’re giving you is $2,000,” you can’t take them to court.

What did West Virginians get in exchange? Several companies promised they would lower insurance premiums for West Virginia drivers.

Companies such as State Farm, Nationwide, Erie, Allstate and GEICO pledged to lower West Virginia rates by a total of $50 million if state residents would give up the right to sue. It is not clear how the $50 million will be divvied up among the companies and customers. But they did pledge.

And they have already lowered West Virginia rates an average of 5.4 percent, Cline reported.

But now we see that these same companies have been lowering their rates all over the country. Gazette reporter Phil Kabler reported earlier this month that Pennsylvania rates overall dropped 10.28 percent since 2004.

Last week, The Associated Press reported that major companies such as AllState, GEICO and State Farm have cut rates by at least 5 to 6 percent this year. Cars are being built more safely, the company representatives say. There are fewer young drivers on the road, and claims are down. So premiums can be cut.

State Farm lowered its car insurance rates in 32 states this year. West Virginia was one. Presumably, people in those other states didn’t have to give up a legal right to get lower premiums.

Nobody should be surprised that insurance company representatives did not tell lawmakers that they were planning to lower rates anyhow. But it is very disturbing that the West Virginia Insurance Commission apparently did not know.

What’s going on here? Last year, the Legislature — with the blessing of the Insurance Commission — gave auto insurance companies the right to drop 1 percent of their customers with no explanation. This year, again with the blessing of the commission, West Virginians lost the right to defend themselves against unfair treatment and evidently got nothing in return that the market would not have provided anyway.

What will the Insurance Commission and Commissioner Cline allow to happen next year? Whom does this commission represent?