Insurance commissioner rejects claims on R-67

OLYMPIA -- The state's top elected industry watchdog, Insurance Commissioner Mike Kreidler, is baring his teeth and pushing back against a heavily financed campaign to overturn new insurance regulations.

This November, Washington voters will weigh in on Referendum 67. Voter approval would validate the insurance legislation, which allows policyholders to sue for triple damages if a company fails to pay up on legitimate claims.

If voters reject the measure, the insurance legislation dies with it.

Under the moniker Consumers Against Higher Insurance Rates, the industry is financing a media blitz to convince voters that it's in their best interest to kill the so-called reforms.

The campaign calls the laws a windfall for lawyers who would have a wide new avenue for filing lawsuits.

Industry analysis shows that consumers can expect rates to increase $205 a year per household if the measure is approved -- a $650 million rate increase statewide for auto, home and business policyholders.

The Reject 67 campaign says that the so-called consumer protections are unnecessary and that even the taxpayer would feel the burden as the rates the state pays would also increase.

With the $8.7 million that insurance companies have contributed to get their message out, compared with $1.4 million primarily from the state's trial lawyers to approve R-67, it might look like the corporate interests will carry the day.

But as the elected leader of the agency that steps in when insurance companies fail to live up to their promises, Kreidler's opinion carries considerable weight.

And Kreidler says the insurance companies' dire predictions are unsubstantiated threats.

"If (insurance companies) act in good faith, there are no costs associated with Referendum 67," he said.

"This is a way of making sure that you have some way of being able to stand toe to toe with insurance companies that can well afford to delay and go to court and have strong legal recourse available to them that go well beyond the average person."

Kreidler said he's most likely to see only the larger claims that have been inappropriately denied.

His office fielded more than 2,700 complaints last year.

"What I presume that I see are like the tip of the iceberg," he said. "A large share of the referrals to our office come from the insurance company's own agents ... It's agents who are unhappy or telling their clients that 'I don't think what they are doing to you is fair. Why don't you call the Insurance Commissioner's Office?' "

Kreidler said it's common for opponents of consumer-protection laws to advance unfounded claims before an election.

"I remember the same arguments two years ago when medical malpractice came up as an issue. The people of the state of Washington rejected the ballot issue and, of course, the prediction at the time was that the rates would continue to go up. Well, they didn't pass it, and the rates have gone down," he said.

If rates do go up, it won't be because of the legislation, Kreidler said. It'll be because insurance companies choose to increase the rates.

"The assumption here is that (the companies) will be paying out more in claims, but the other assumption is that maybe they should have been paying out more to begin with, if these were reasonable claims that they were artificially denying," Kreidler said.

The commissioner's office recovers millions of dollars each year for people who have been denied or delayed in receiving proper treatment from their insurance company, but the new law provides another tool for consumers, he said.

Kreidler said insurers won't leave the state if the referendum passes.

"They are making money," he said. "We don't have punitive damages in Washington. We are one of a handful of states that don't."