Mountaineer State Faces Many of the Nation’s Same Issues

While not the biggest state in the southeastern region, West Virginia like all other states has its insurance issues.

Insurance Commissioner Jane Cline recently set aside some time to talk with Insurance Journal Southeast regarding some of the insurance issues impacting the state.

Cline was named to her post on Jan. 15, 2001 by Governor Bob Wise. Prior to her current appointment, Cline operated a consulting firm, Jane L. Cline & Associates.

She served as commissioner of the West Virginia Division of Motor Vehicles (DMV) from November 1989 to October 1997 where her focus was on making the Division’s services more accessible to all citizens of West Virginia by opening and expanding regional offices.

Insurance Journal: How would you describe the current property/casualty market for independent agents in West Virginia?

Cline: We’ve experienced some affordability and availability issues in property and casualty markets. Our homeowners market has become very tight and we’ve been receiving inquiries on behalf of consumers with respect to their inability to find coverage. I think there are a variety of reasons for these issues. We’ve had several catastrophic situations between floods and hail storms and things of that nature. We’re a very rural state and you don’t have the same access to professional fire departments and some of those issues play into that. The national market for homeowners has obviously tightened up as well. We’ve had several companies that have had moratoriums on any new business and that includes our largest carrier State Farm. They haven’t taken any new policies in West Virginia in either homeowners or auto since December of 2002. They have close to 30 percent of the market share in both of those lines, so that has had an impact on us. Some of our small farm mutuals that tend to insure the risk that are in the rural areas have also had moratoriums.

IJ: How would you describe the overall auto market in the state?

Cline: Again, State Farm has had moratoriums on any new policies and some other carriers have had as well. Our legislature had an interim study committee that has been working to study affordability and availability issues in the commercial market as well as in the personal lines market. Through the course of this past year, we’ve spent a lot of time educating them and providing them information about what we’re seeing in the market. In auto, I think it is more of an affordability issue as it relates back to our state’s per capita income and some of those issues play into that.

IJ: In the last year, have insurers been requesting to come into the state to do business or has there been a mass exit of insurers out of the state?

Cline: We’ve had a few new licensees but haven’t seen much as far as actively writing. There are companies that have withdrawn from some of the commercial lines. With respect to our personal lines, West Virginia is unique in that we’re one of the few states that have “lock in” clauses on non-renewal of homeowners and auto. A consumer that has been with a homeowner carrier beyond four years is locked in and there are only very specific reasons why that individual can be non-renewed or canceled. In auto, that “lock in” clause is for two years. What we’ve heard from the industry is that it is sometimes a deterrent for them to come in and actively write because once they get here they can’t exit. By the same token, it is one of those issues where you try and balance the interests of the consumer and the company. In auto insurance as we speak, there is no opportunity for insurers to withdraw, in homeowners they can withdraw from the entire line if they so choose. We’ve had some companies express concern that it doesn’t allow them to appropriately control their book of business. It is one issue the industry has raised as making it more difficult for them.

IJ: West Virginia is currently working on forming a fraud unit. Can you update us on the progress?

Cline: The governor introduced a fraud bill and the bill running at this point, HB 4004, has passed the House and the fraud unit legislation has passed out of Senate Judiciary and is now in Senate Finance. We’re optimistic that the legislation will ultimately pass. As we all know fraud is a cost issue and it has an economic impact on everyone. By being able to investigate fraud and being able to work with prosecutors and prosecute fraud, people will understand it is not an acceptable thing. We also intend to do a significant amount of education related to the issue and work with consumers in explaining the whole concept. The fraud unit will be there for fraud committed by agents and companies as well. Our fire marshal has statistics that would indicate that approximately 1,000 fires last year they suspected were arson. We’ve had contact with other states with respect to how their fraud units were set up and what we might want to try and avoid in our legislation versus what we might want to more aggressively pursue.

IJ: As a smaller state, what do you see as the challenges for agents in the state?

Cline: They have faced significant challenges in finding carriers who will accept new business. In the case of commercial policies, we’ve seen cancellation of the commercial policies, so they’ve had struggles trying to find available markets to assist customers.

IJ: What have you set as goals for this year for both yourself and the department?

Cline: One of our goals will be to accomplish the fraud unit. We’re going to continue to work on consumer awareness in making sure that consumers know we exist and we’re there as a resource to help them. With respect to the insurers, we’re continuing to work hard on modernizing the insurance department and making improvements in technology. We want to make it easier for them to transact business here. We will also continue evaluating our market and provide information to the governor and the legislature that they can make better decisions to changes to our statutes that may be having a negative impact. We want to work with the industry to provide them a better opportunity to successfully do business here. A more competitive market is healthy for all of us.

IJ: Is the job all you thought it would be when you came into office three years ago?

Cline: The position has been much more challenging than I anticipated it would be. To come into an industry and regulate it when the market is the hardest, it has made it quite challenging. I think the department has made a significant amount of progress, but there is still much opportunity for improvement, so we’ll strive to the extent we can in staff development, consumer education, and working with the industry to make improvements there as well.

To learn more about the department, visit www.wvinsurance.gov/. To comment on this story, e-mail: thomas@insurancejournal.com.