Today the Insurance Research Council (IRC) announced the results of its recent report analyzing the impact of third-party bad-faith reforms adopted in West Virginia.
Based on its findings, IRC estimates that the Third-Party Bad-Faith Act (S.B. 418) introduced by West Virginia state legislature has reduced underlying insurance coverage costs by about $200 million in the five-year period since the reforms were enacted.
In 2005, S.B. 418 had been instated to eliminate the right of third-party insurance claimants to file lawsuits against another person's insurer if the claimant believed the company treated them unfairly in the settlement of his or her claim. Instead of relying on the courts, claimants were provided an administrative process for filing complaints with the Commissioner of Insurance, who was then responsible for investigating complaints and imposing appropriate fines and penalties where it was determined that an insurer had violated the state's Unfair Trade Practices Act. The passage of S.B. 418 was widely viewed as a major accomplishment in efforts to improve West Virginia's litigation environment.
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