Insurance Premiums Stable After Derecho Aftermath

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West Virginia insurers have paid $87 million to state property owners in the months following last June’s derecho, based on data complied by the state insurance commissioner’s office. For the most part, the property owners did not see large increases in their premiums as a result of the claims. Jane Cline, the state’s previous insurance commissioner, has said that she thinks reforms passed within the last decade have helped to forestall any possible hefty post-derecho increases. “It’s a much more stabilized marketplace than it was in early 2000s,” Cline said. Based on the data complied by the West Virginia Offices of the Insurance Commissioner, state residents filed nearly 36,700 insurance claims in the 30 days following the June 29, 2012 storm.

The claims resulted in $87 million in payments to state property owners to cover storm damages. A year later, evidence so far indicates the damage claims have not resulted in significant increases for premiums or coverage terminations for state insurance holders. Cline, who is now a lobbyist and director of public policy for the Spilman Thomas and Battle law firm, recently analyzed the data collected by the insurance commissioner’s office, as well as anecdotal evidence that was gathered by various insurance companies. She said that the data have not shown any increases in companies terminating homeowner coverage following the storm. She also said that insurance rates have remained relatively stable. Many post storm increases that she has seen have been within the 3 percent range.

"That's relatively small when you think about the overall dollar amount that was paid out as a result of these claims," she said. She also noted that the insurance market in West Virginia has stabilized greatly since she was first appointed to be the state insurance commissioner in 2001. "In the early 2000s . . . we had companies that stopped writing policies in West Virginia," she said. Among those companies, it also included homeowner and automobile insurance policies. Cline credited legislative reforms that were passed in 2005 with making the change. That year, the governor had led an effort to stop what were known as third party bad faith lawsuits, which permitted claimants to sue another person’s insurance company if they believed that the company had failed to act in good faith when settling the lawsuit.

At the time, West Virginia was only one of six states that were able to permit that type of claim. Insurance industry officials had complied that the third party bad faith lawsuits had become so common and almost “abused”, they were straining the state consumer’s ability to find and afford basic insurance coverage within the area. The reforms then took the complaints out of the legal system and put them under the attention of the administrative review of the insurance commissioner’s office, which eliminated windfall jury awards to individuals and provided more reasonable award amounts.