AIA Commends West Virginia Legislature’s Elimination of Third-Party Causes of Action

April 12, 2005

The American Insurance Association (AIA) has commended Gov. Joe Manchin (D) and the West Virginia legislature on the passage of legislation (SB 418) designed to eliminate private causes of action by third-party claimants.

According to AIA, this legislation will help bring stability and predictability back to the state’s civil justice system. Earlier, West Virginia legislators addressed the state’s medical malpractice and workers’ compensation liability crises by eliminating third-party causes of action for claims in those lines of insurance.

“West Virginia can now join the 44 other states in the nation that do not allow third-party bad faith lawsuits,” explained Taylor Cosby, AIA vice president, Mid-Atlantic region. “Passage of SB 418 will result in an improvement in the state’s insurance market and more affordable insurance for West Virginia consumers.”

According to AIA, third-party bad faith private causes of action encourage fraud and inflated claims in all lines of property/casualty insurance. Insurance companies considering doing business in West Virginia have reportedly said that the threat of third-party bad faith litigation is one of the main reasons they choose not to do business in the state.

Equally important, repeal of third-party causes of action will reportedly help ensure that this economically destructive doctrine is not an impediment to the growth of business and industry. If it had been allowed to stand, one result would have reportedly been further damage to the state’s economy.

“A sound insurance marketplace is one of the key ingredients to a thriving business climate,” explained Cosby. “The enactment of meaningful civil justice reform through the repeal of private causes of action by third-party claimants will provide a more business-friendly climate for insurers.”

“AIA would like to commend Gov. Joe Manchin (D), Insurance Commissioner Jane Cline and the leaders of the House and Senate for working together to pass this crucial piece of legislation for West Virginia citizens,” stated Cosby. “Passage of SB 418 should result in more insurers entering the marketplace which will lead to increased competition, which will result in a healthier business climate and possibly in lower rates for West Virginia consumers.”

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