Insurers anticipate a year of "defense" in 2009

 

Thursday, Mar 05,2009, 11:27:34 PM   Click:

Insurers anticipate a year of "defense" in 2009, Sean P Carr
With a less favorable political climate and a hostile economic climate, property of the United States or accident insurers anticipate renewed legislative and regulatory battles in the states in 2009.

Nationally, the Democrats who have made significant gains in the State legislatures will be more receptive to the arguments of lawyers and consumer groups including the issues of insurance credit scoring, rates and other amenities questions, the representatives of property / casualty insurers said.

It is too early to determine the states most important actions on these issues, but the general trend is that of "defense, defense, defense," said Joe Thesing, state affairs director of the National Association of Mutual Insurance Companies. "NAMIC and its member companies are very ready for one year of defense."

Moves to restrict the use of consumer credit data in insurance scoring has received a boost from growing consumer concerns about the economy on seizures and loss of jobs. Florida, Nevada, Delaware Wisconsin are the states where this issue again in May, Thesing said.

"Each year I am surprised to hear some pick it up," said Tammy Velasquez, Vice President and Director of State affairs for the American Insurance Association.

"Credit is a very important element of underwriting criteria. In most states, virtually every insurer uses," said Robert Hartwig, president of the Insurance Information Institute.

In December, the U.S. Federal Trade Commission ordered nine of the largest insurance, representing 60% of the U.S. market, to provide information on how the records of consumer credit are used in their subscription models rate-setting (BestWire, Dec. 23, 2008).

Insurers have been successful in recent years in promoting "rate modernization" legislation providing file and use provisions and standards less restrictive than prior approval. Since 2003, 22 states have adopted rate of modernization measures, based on a national conference of insurance legislators model, according to NAMIC.

But insurers expect push-back in 2009, driven by consumer concerns. Insurers are already the fight against the amendment of the regulations in California and Colorado (BestWire, 6 January 2009).

"The difficult economic climate led some to point to insurance companies to get answers," said Velasquez.

Radar on insurers is the potential for new "bad faith" legislation that could open the door to lawsuits and damages has increased prices. Washington, voters adopted it by referendum in 2007, ballot and Minnesota passed a bill compromise in 2008 (BestWire, April 16, 2008). In 2007 and 2008, the bad faith of the bills have been introduced in 16 states, according to NAMIC.

"Based on our analysis of climate policy, we expect the trial bar to push vigorously the Statehouse legislation throughout the country will create more opportunities to file lawsuits and inflate damages" said John Lobert, Senior Vice President, State Government Affairs for the Property Casualty Insurers Association of America.

Auto repair bills will be legislative attention, particularly in the north and New England, "said Velasquez. Insurers and repair industry fought on issues of management, including rules and labor rates, which are cost factors as important to car insurance, Lobert said.

As state governments struggle to balance budgets, we can expect to turn to the insurance industry of revenue, said Velasquez. "They will collect all the rocks, they can look below for taxes, fees and surcharges," she says.

Hartwig said the large "X" factor for insurers is the potential for a new level of federal involvement in insurance regulation. "This year, hanging over the entire spectrum of federal reform," he said. "A year from now, insurers will be to respond to both state and federal insurance regulation?"

(By Sean P. Carr, senior editor, BestWeek: Sean.Carr @ ambest.com)

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