APCIA Urges Veto of Harmful Legislation to Establish New Tort of Insurance Bad Faith

RICHMOND, Virginia, March 13 (TNSres) -- The American Property Casualty Insurance Association issued the following news release:

The Virginia General Assembly has passed Senate Bill 256 to establish a new tort of insurance bad faith, which could result in higher auto insurance loss costs and increased litigation. As the bill is poised to go to Governor Glenn Youngkin, the American Property Casualty Insurance Association (APCIA) urges the governor to protect Virginians from higher costs and veto this harmful bill. A new analysis (https://www.apci.org/attachment/static/9682) by an independent actuarial firm on Senate Bill 256 found that the legislation could have an additional premium impact of $220 million to $550 million across motor vehicle insurance in Virginia, representing an increase of 5.6 percent to 14.3 percent for auto premiums for residents and businesses. The study concludes the median estimated impact is a 9.9 percent auto premium increase per policyholder annually.

The study was conducted by Milliman, Inc. for APCIA to assess the impact of Senate Bill 256 on Virginia policyholders.

"Senate Bill 256 would lead to higher auto insurance loss costs, increased litigation, and could increase the number of uninsured drivers on the road if coverage becomes less affordable," said Nancy Egan, vice president of state government relations and counsel for APCIA. "The bill would likely have a disproportionate impact on low-income Virginians who can least afford higher premiums. Governor Youngkin needs to protect Virginians from higher auto insurance costs by vetoing Senate Bill 256."

Senate Bill 256 will open the floodgates of litigation against insurance companies by establishing an onerous first-party bad faith law in the state. Only a few other states in the U.S. have enacted such laws. Higher losses and increased litigation mean higher costs for consumers and businesses.

"No other state has a law as problematic as Senate Bill 256, which would make Virginia an outlier to the detriment of every Virginian who purchases auto insurance," continued Egan.

Similar efforts have been tried in other states with harmful results for consumers. When states like Colorado, Florida, and Washington passed similar legislation, studies showed there was an increase in the cost of insurance claims and insurance premiums, attributable to unwarranted increases in both settlement amounts and lawsuits. If increases like this occurred in Virgnia, it could ultimately negatively affect consumers.

This misguided legislation will not add protections that Virginian consumers don't already have. Virginia has strong, robust consumer protections regarding insurance claims practices and strong regulatory protections, oversight, and investigations. Current Virginia law already holds insurers accountable for unfair delays or refusal to pay claims. The Virginia Bureau of Insurance has full regulatory authority to handle consumer complaints and take action against insurers through market conduct examinations, fines, penalties, and more. Even with its authority to act against insurers, the Bureau found only seven instances of unfair claims violation in the five years of data provided by the Bureau.

"Virginians are already dealing with rising auto insurance costs due to inflation, supply chain issues, and the increasing cost of medical care and auto repairs. Over the last five years, auto insurance rates have increased 36.2 percent in Virginia. Virginians need Governor Youngkin to veto this harmful bill that could raise auto insurance costs by up to an additional 14.3 percent," added Egan.

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The American Property Casualty Insurance Association (APCIA) is the primary national trade association for home, auto, and business insurers. APCIA promotes and protects the viability of private competition for the benefit of consumers and insurers, with a legacy dating back 150 years. APCIA members represent all sizes, structures, and regions--protecting families, communities, and businesses in the U.S. and across the globe.

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Original text here: https://www.apci.org/media/news-releases/release/79293/