Legislators Shouldn’t Reward Insurance Companies That Don’t Pay Their Bills
West Virginians Should Be Priority, Not Industry Worth $670 Billion
January 30, 2015
Charleston, W.Va. – The West Virginia Association for Justice today urged the West Virginia Legislature to reject proposed SB 308, which lowers the rates for pre and post-judgment interest. The law exists to encourage insurance companies to settle claims quickly when liability is clear and to pay verdicts owed to West Virginians.
“You’re supposed to pay your bills on time. When you don’t, there’s a penalty for that. That’s what this law does. It encourages insurance companies to handle claims fairly and in a timely manner. At the same time, when there is a verdict or settlement and the company delays payment for weeks or months, there should be a penalty for that. The penalty is the interest the company has to pay,” said Anthony Majestro, president of the West Virginia Association for Justice.
Current law sets the interest rate from seven to eleven percent. Early estimates show that the property/casualty insurance industry had a net profit of $50 billion in 2014 (Hartford Courant – January 7, 2014). The industry’s gains on its investments totaled $8.8 billion just through the first nine months of 2014, with net investment income totaling $34.3 billion. The industry’s net worth totaled a record $673.9 billion as of September 30 (Verisk Analytics – January 26, 2015).
“The industry’s own annual percentage rate is 7.6 percent, but this bill lowers the minimum interest owed by the industry to West Virginians to just three percent. If the insurer owes you $50,000, an interest rate of three percent provides only a $1,500 penalty. That’s pennies for an industry that earns a billion dollars a month on its investments. If an insurance company holds that money for six months, it’s going to earn them five times that amount. There’s no incentive to pay the claimant in a timely manner. It’s like lowering a speeding ticket for driving 30 miles per hour over the speed limit down to just $5. When the penalty doesn’t make you think twice, you don’t care.”
“The money owed ensures that state residents can pay their own bills, keep a roof over their heads and feed their families. The West Virginia Legislature should focus its efforts on taking care of West Virginians and getting what is owed to them in a timely manner—not increasing corporate profits for an industry already worth billions.”
WVAJ AFFINITY PARTNERS
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