Insurance giants not supporting Ref. 67

Seattle Times
Friday, June 22, 2007

The state's two largest insurance companies say they won't join their industry colleagues in financing a proposed ballot measure to repeal a new insurance law.

Instead, Pemco and Safeco will rely on a pledge from Democratic Gov. Christine Gregoire to propose changes next year to make the Insurance Fair Conduct Act more palatable to the industry.

Under the new law, courts can approve triple damages if an insurance company is found to have violated the act and unreasonably denied coverage or payment.

The agreement could help keep Referendum 67 off the ballot.

Having Pemco and Safeco on the sidelines could mean less money for the campaign. It also would allow trial lawyers, Democratic lawmakers and others to argue the referendum is mostly an effort by out-of-state insurance interests.

So far, eight insurance companies and a PAC have donated $650,000 to the campaign to qualify the referendum for the ballot. Of that, all but $150,000 has come from out-of-state companies.

Trial lawyers have donated $100,000 to the other side of the ballot fight.

The campaign has until July 21 to collect more than 112,400 signatures to qualify the referendum for the November ballot.

Pemco spokesman Jon Osterberg said Gregoire has promised to present changes to the new law in the 2008 legislative session.

"And what we trust here is that the governor will identify all these unintended economic impacts of that Senate bill and will, in fact, present revised legislation," Osterberg said.

During the legislative session, Pemco and Safeco urged Gregoire to veto the bill.

"We did meet with her and she said at the time she would sign the bill but acknowledged it, quote, 'went beyond the testimony that supported the bill,' " Osterberg said.

In a May 22 letter to Pemco CEO Stan McNaughton, Gregoire said a working group will look at several issues, including what conduct could lead to triple damages, whether those damages should be capped, and what types of insurance should be subject to the new law.

Osterberg said the law adds more complexity to an already complex claim process and will lead to more litigation and higher insurance rates. But he said Referendum 67 "is not in the consumer's best interest."

"The democratic process is imperfect; sometimes it is flawed. But Pemco really feels it is not right to dump a complex referendum on consumers that is hard to understand and force them to deal with it," he said.

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