Motorcycle Insurer Pulls Out Of West Virginia

June 09--About 6,000 West Virginia motorcyclists are searching for new bike insurance.

Their insurer, Rider Insurance, of New Jersey, announced it is terminating West Virginia service because of the state's difficult legal system.

The decision comes in the wake of the Legislature passing a variety of legal reforms during the past two sessions to get off the "Judicial Hellhole" list.

Rider says on its website it was founded by a motorcycle enthusiast. It devotes itself exclusively to motorcycle insurance and provides polices in New Jersey and eight other states, including Maryland, Pennsylvania, Ohio and Virginia.

Rider announced its decision in a May 31 letter to its customers. One customer provided a copy to The Dominion Post.

"We have concluded that it is impossible to do business in West Virginia as a specialized company that is determined to maintain low premiums for our customers," it said in the letter.

"The reason is the West Virginia legal system. ... What we have found is that West Virginia requires us to devote an unfair amount of our resources to properly adapt to its legal system. It is far more difficult than the judicial system in any other state in which we write insurance."

Rider expressed some optimism after that, saying, "Our sincere hope is that at some point in the future the state becomes friendlier to specialized insurance companies. We would welcome a return to West Virginia."

Rider said it will no longer issue new policies here as of June 15, and renewals as of Aug. 18.

Asked for more specifics about its decision, Rider Marketing Manager Nicole Regna provided this explanation: "It is true that the state has made some reform efforts. Unfortunately none of them impact Rider. We write only motorcycle insurance.

"The issue for us," she said, "is that the judicial system attitude towards insurance companies requires our adjusters to spend a lot of time on West Virginia claims. That is so because the plaintiffs' bar needs to only perceive a possible error (even if it does not exist), and the courts will let them pursue it, with significant cost to the carrier, and without consequence to the plaintiff's attorney if the matter has no merit.

"That attitude," she continued, "forces unjust settlements, since we are forced to evaluate the cost of defense versus paying an extra amount in claims."

This happened often enough, she said, that Rider concluded that only high-premium insurers could afford to do business "in a state where the judicial approach is so skewed. Essentially the judicial system is unaffordable for smaller, specialized companies like Rider."

Given the recent judicial reform efforts, The Dominion Post asked the leaders of the House and Senate and the governor for their reaction to Rider's view of the legal system.

The House speaker and Senate president responded jointly through Senate President Bill Cole's spokeswoman Jacque Bland.

"The poor reputation of West Virginia's legal system did not occur overnight, and it's unfair to expect that the by-products of that reputation will be erased overnight," she said.

"While much has been done by the Legislature to correct the laws of our state that were previously outside of the legal mainstream, it is clearly too soon to tell whether our judiciary's application of such laws is making the difference intended."

Ultimately, she said, they believe the changes will help consumers.

The Legislature has also taken steps to make the insurance market more competitive with other states, Bland said. SB 330, passed during the last session, reduces the period of time insurers must wait to cancel automobile insurance policies for non-payment -- from 30 days to 14 days.

With that, she said, "We've moved closer toward the mainstream for issuance of insurance policies, which will ultimately help lower rates for consumers in West Virginia."

Bland also noted that following 2015 legislation, Progressive Insurance lowered its West Virginia rates. Progressive's Corporate Claims Counsel James Dodrill, speaking for CEO Glenn Renwick, said in a letter to Cole (Bland provided a copy to The Dominion Post): "The achievements of this past legislative session are already having a positive impact on Progressive's consumers in West Virginia."

Bland also noted that insurance rates are typically based on experiential data. "And as such, it takes time for claims to work their way through the legal system in order for insurers to adjust appropriately to the changing legal environment."

Gov. Earl Ray Tomblin's spokeswoman Shayna Varner provided a statement: "Throughout his years of public service, Gov. Tomblin has worked with members of both parties to make significant reforms to the state's legal system. ... During the 2015 legislative session, Gov. Tomblin signed a number of legal reforms into law. While there is always work to be done, the governor is proud of the steps West Virginia has taken to help our state's employers and protect our residents."

John Mooney, senior analyst for the state Insurance Commission, said Rider's situation is unique. The overall market for automobiles and motorcycles is pretty steady. Some customers are seeing rate increases of 1-2 percent, but that's not out of the ordinary.

Rider entered the state market in 2009 and suffered heavier-than-average losses. "Rider is one that's just done worse," he said.

Rider doesn't reflect a trend, he said. "The market as a whole is pretty good." And Rider customers should be able to find alternative insurers.

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