W.Va. Releases E-mail Proposals; House Committee Advances SB 30

Details of negotiations between West Virginia insurance companies, Gov. Joe Manchin and Brian Kastick were released after a court decision requiring e-mails sent on Feb. 22 and 23 to be revealed to the public. Also, after its passage, Senate Bill 30 advanced to the House Banking and Insurance Committee with added protections for businesses and homeowners. SB 30 would strip Insurance Commissioner Jane Cline’s power to pre-approve rates insurers charge West Virginia businesses.

Information in the e-mails between the insurance commissioner and Brian Kastick, a member of the governor’s staff, revealed insurance company representatives promised to reduce premiums by almost $50 million if the lawmakers eliminated third-party bad-faith lawsuits, made it easier to drop policies and limited their liability in cases with multiple defendants.

Judge rules info is public
April 1, Kanawha Circuit Judge Paul Zakaib ruled that the e-mails were public information. The Insurance Commission revealed the specific offers soon after it received confirmation of the court decision, ending the Manchin administration’s efforts to keep them secret.

The insurance companies made the offers in February at the behest of the Manchin administration.

For more than a month, Gov. Manchin used the offers to promote his proposal to eliminate third-party bad-faith lawsuits. He claimed that insurance companies promised to cut rates by at least $50 million after the cause of action is eliminated.

People use third-party bad-faith lawsuits to sue other people’s insurance companies for not settling with them in a fair, timely fashion. Business groups and insurers say the lawsuits hurt the state’s economy. Consumer groups and plaintiff’s lawyers say average citizens use the action to protect themselves from being bullied by insurance companies.

The Manchin administration made Cline’s e-mails about the insurance company’s offers public last month, but blacked out the specifics of each offer from copies of the e-mails it provided to the Charleston Gazette. The administration contended that the details were trade secrets exempt from public disclosure under the Freedom of Information Act.

SB 30 Advances
In related legislative action, the House Banking and Insurance Committee advanced a SB 30 after adding some protections for businesses and homeowners.

SB30 initially would have allowed insurance companies to drop 1 percent of all homeowners’ policies in the state for no reason, a move Delegate Harry Keith White, D-Mingo, said is aimed at making insurance more available and affordable.

The House Banking and Insurance Committee’s version would allow insurance companies to either take the 1 percent overall drop, or to cancel a policy if it has two claims over two years.

“Either way it makes it a lot easier for insurance companies to drop,” Delegate Carrie Webster, D-Kanawha told the Huntington Herald Dispatch.

Both the Senate’s and the committee’s proposals allow insurance companies to file for a commercial, or business, rate increase with the state Insurance Commission and immediately start charging customers that rate.

The bill would strip Insurance Commissioner Cline’s power to pre-approve the rates insurers charge West Virginia businesses. Cline had requested the switch to a “file and use” system, arguing it will improve the state’s commercial insurance market.

But under the committee’s version, firms must pay back money from the new rate if the state insurance commissioner later finds it was too high.

A “presumptive prospective” clause in the Senate version would allow insurers to keep the higher payments even if the insurance commissioner orders a lower rate.

The House committee also removed a “value policy” clause that would allow an insurance company to pay only 80 percent of the policy’s value in cases of fire if homeowners did not replace their residence.