W. Va. Insurers React to Passed Legislation, Five Companies Decreasing Auto Rates

May 2, 2005

Insurers in West Virginia, reacting to the legislation singed last week that eliminates third-party, bad-faith lawsuits, have begun to take the first steps toward lowering insurance rates.

State Farm Insurance Friday requested approval for a 10 percent rate decrease for its private passenger automobile insurance customers from the West Virginia Insurance Commission and the governor.

The rate filing was submitted to Gov. Joe Manchin and Jane Cline, insurance commissioner, during Manchin’s 2 p.m. signing of the bill Friday in Charleston. The decrease will manifest beginning with policyholders who renew after the new law takes effect in July.

Bob Marshall, a State Farm agent in Vienna, told the Parkersburg News and Sentinel the rate reduction promised by his company is fantastic news.

“We have not been able to write new business, homeowners and auto for about two years. To say it’s been inconvenient is being pretty moderate. Not only will we be writing new business, but we will be doing it at reduced rates. That’s especially nice for those who have not been able to write anything for the last couple of years,” Marshall said. “It really will make life easier for our customers and also for us. We’re really glad to see the rates going down. I think you can take it to the bank that these rates are going to drop.”

Cline told the News and Sentinel the State Farm rate reduction will result in $34 million in savings for West Virginia customers. The average annual State Farm premium for automobile insurance in West Virginia is $890, so the average policyholder will see an annual $89 reduction per vehicle.

“I am pleased to reaffirm State Farm’s commitment to Governor Manchin in response to the meaningful insurance reform enacted by the West Virginia Legislature,” said Arlene Hogan, State Farm operations vice president for the Mid-Atlantic region. “These historic reforms will help make insurance more available and more affordable for West Virginia consumers.”

In addition to State Farm, Westfield Insurance Company Friday submitted a rate reduction request that will result in $1.6 million in savings for its West Virginia customers.

Cline had additional good news Friday. She said she expects Allstate and Nationwide to submit their rate reduction requests by the middle of May. Also, Eerie Insurance Company is expected to submit a request in the next couple of weeks.

“I think this shows that the industry’s commitment to Gov. Manchin was valid and was a true indication that these changes will have a positive impact on companies, allowing them to be able to offer products at a reduced rate as well as increasing the availability of products to consumers in the state,” Cline said.

Those five insurance providers, the largest serving the Mountain State, promised to lower their rates if the state would engage in tort reform to improve the liability climate in West Virginia.

On Thursday, Allstate announced it would offer reduced rates, expanded product lines and a wider variety of coverage options in the state. The changes include a 11.5 percent decrease in bodily injury liability rates for all of the company’s auto policyholders. The company announced it will forego any homeowners insurance rate increases for one year. And that’s not all.

Allstate officials said the company will expand its underwriting guidelines in West Virginia for homeowners and automobile insurance starting June 20. As a result, the company will accept many new home and auto customers who now do not qualify for coverage.

“Allstate’s new investment in the state would not have been possible without Governor Manchin’s leadership and commitment to reforming West Virginia’s insurance laws,” said Patty VanLammeren, field vice president for the company’s capital region.

The Associated Press contributed to this report.

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