In a surprise move, the West Virginia Senate Finance Committee speeded up its consideration of a third-party bad faith reform bill, quickly approving the bill and sending it to the Senate for a full vote by midweek, according to the Property Casualty Insurers Association of America (PCI).
S.B. 418, Gov. Joe Manchin’s proposal to eliminate third party private cause of action lawsuits, has already been approved by both the Senate Judiciary and Finance Committees, said Lynn Knauf, policy manager for PCI, which testified in favor of the bill before the Senate Judiciary Committee.
“This is a major victory for insurance consumers in West Virginia,” she said. “Not only do third party actions create an enormous financial burden for policyholders, they also discourage new insurers from entering the market, and existing insurers from growing and offering new products. We fully support the governor’s efforts to improve the state’s insurance market.”
S.B. 418 does not eliminate any existing Unfair Trade Practice law protections, but instead requires third party claimants to file their complaints as administrative actions — a potentially more affordable, and less intimidating venue for many people, Knauf added.
“What this bill does is eliminate the incentive to pursue weak claims, push for excessive settlements, retain a lawyer to force inflated settlements, or engage in insurance fraud,” she said. “Insurance should work to quickly and fairly compensate those who have suffered a loss, not create a cottage industry for fraud.”
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