HD22 - Hearings Held to Investigate and Determine the Availability and Affordability of Insurance Coverage in the Commonwealth
Executive Summary: Legislative Request Problems in obtaining liability insurance at reasonable and affordable prices continue to be faced by many businesses, public entities, and professions in Virginia today. The insurance consumer has been confronted with escalating premium rates, lower policy limits, higher deductibles, and a narrowing of insurable risks. In some cases, insurance is not available at any cost. When examining the availability and affordability of insurance coverages considered essential or required by law, many of these consumers are expressing concern and outrage at what has been labeled the liability insurance "crisis". The 1987 General Assembly passed several measures directed at easing the "crisis". Proposals for tort reform as well as insurance reform produced various new statutes aimed at the liability insurance problems being faced by Virginians. In addition, a number of legislative studies were requested to continue the examination of the insurance climate in Virginia, including House Joint Resolution 261. According to the Resolution, recent higher than normal premium increases, unexpected policy cancellations, and the unavailability or limited availability of particular lines of insurance have affected practically everyone. The Resolution further stated that "hearings are needed to determine whether insurance coverage is available at adequate and affordable levels for those persons who are in good faith entitled to obtain through the voluntary market an adequate level of such coverage which is required by state law or by reasonable or prudent business practices, and to determine whether rates for such coverage are excessive, inadequate or unfairly discriminatory." The Commission was therefore directed to hold hearings to investigate and determine the availability and affordability of insurance coverage in the Commonwealth. The Resolution also requested that the Attorney General's Office participate in these hearings. A discussion of the current insurance climate in Virginia by Attorney General Terry is found in Appendix A. The 1987 General Assembly also passed House Bill 1235 which, among other provisions, created § 38.2-1905.1 requesting that the State Corporation Commission report annually on the level of competition, availability, and affordability for certain lines and subclassifications of commercial liability insurance in Virginia and then conduct hearings on whether competition is an effective regulator of rates. The first such report was completed in November, 1987 and released to the members of the General Assembly. This present study, pursuant to House Joint Resolution 261, was conducted as a supplement to that report on competition in Virginia and was directed toward a review of the liability insurance problem from the public's perspective. Public Meetings In response to the study request of House Joint Resolution 261, the State Corporation Commission directed the Bureau of Insurance to conduct public meetings around the state to determine the extent of insurance problems actually being faced by the Virginia consumer. Bureau staff organized and conducted these meetings in five localities - Roanoke, Richmond, Norfolk, Fairfax, and Winchester - to hear the concerns of those consumers willing to step forward and relate their experiences about attempting to obtain adequate and affordable insurance. Transcripts of the meetings are available from the Bureau upon request. Testimony Highlights A total of 46 people testified at the five public meetings. Organizations that were represented included the Virginia Nurses Association, Virginia Council of Nurse Practitioners for the Southwest Region, Northern Virginia Council of Nurse Practitioners, National Alliance of Nurse Practitioners, National Organization for OBGYN and Neonatal Nurses, Medical Society of Virginia, Virginia Independent Automobile Dealers Association, Virginia Pest Control Association, National Federation of Independent Businesses in Virginia, Virginia Van Pool Association, Northern Virginia Family Day Care Association, Frederick County Fruit Growers Association, and Virginians for Fair Rates and Fair Compensation. In addition, Bureau staff heard from nine nurse practitioners, five physicians, three lawyers, two community association presidents, two family home day care providers, two cab drivers, a driving school owner, a moving and storage firm owner, a wrecker service owner, a realtor, a restaurant owner, two homeowners, a charter boat operator, an ice skating arena manager, a school superintendent, a county administrator, a gymnastics school operator, two consumers of health services, a corporate secretary of a multi-bank holding company, and a medical center administrator. Individuals from many segments of our society and from all areas of the Commonwealth came forward to testify about their concerns over the current insurance climate in Virginia. What was heard at the meetings was that many Virginians are being affected by the high premium increases, unexpected policy cancellations, and the unavailability or limited availability of particular lines or subclassifications of insurance that has characterized the liability insurance "crisis" nationwide. Due to the general nature of public meetings and the relatively small number of individuals who spoke, the testimonies may not be representative of each business area and are offered only as examples of what has occurred to business owners and managers in Virginia. Excerpts of the testimony have been presented verbatim so that members of the General Assembly are provided an accurate account of the specific concerns of the Virginia insurance consumer. Conclusions As previously noted, the testimony offered at the five public meetings is being presented as supplemental information to the report on competition developed by the Commission. And while that report identifies the specific lines and subclassifications ·where competition may not be an effective regulator of rates, one general conclusion drawn from the public meetings held pursuant to House Joint Resolution 261 is that the cost of liability insurance is a serious problem facing many business owners, public entities, and professionals in Virginia. The issue of cost was most clearly seen with the nurse practitioners. Faced with a 2500% increase in premiums this year, more nurse practitioners than anyone else came forward at the public meetings and pleaded for help. The aggregate coverage available to them was decreased from 3 million dollars to 1 million dollars while their premiums increased from $58 to $1,500, causing many nurse practitioners to consider leaving the field because they simply cannot afford the insurance. The report on competition in Virginia that was developed by the Commission is an expansive source of information in determining the availability and affordability of liability insurance in Virginia. Therefore, while the findings of this current study conducted pursuant to House Joint Resolution 261 may provide supplemental information from the consumer's perspective, any specific conclusions or recommendations are deferred to those made in the Commission's report. |
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