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    Document Summary
    - Report Published -

    House Document No. 49
    PUBLICATION YEAR 1990

    Document Title
    The Availability and Affordability of Liability Insurance, the Antitrust Exemption Afforded Insurers and the Reinsurance Costs Associated with Liability Insurance

    Author
    Joint Subcommittee

    Enabling Authority
    HJR 120 (Regular Session, 1988)

    Executive Summary
    The Joint Subcommittee established pursuant to House Joint Resolution No. 382 of 1989 was charged to study the same primary issues under House Joint Resolution No. 120 of 1988: (i) the reinsurance practices of insurance companies, (ii) the advisability of modifying the insurance industry's exemption from the Virginia Antitrust Act and the role of rate services organizations, and (iii) the means of insuring the availability and affordability of liability insurance in the Commonwealth. At its first three meetings, the Joint Subcommittee received testimony from the interested parties on the three primary issues. At the fourth meeting, the Joint Subcommittee considered proposals submitted by interested parties and adopted its recommendations. The work and deliberations of the Joint Subcommittee will be discussed in detail later in this report, but for the purposes of this summary it will suffice to say that the Joint Subcommittee considered eight separate recommendations. All eight recommendations were agreed to and will require the introduction of legislation at the 1990 Session of the General Assembly. Seven of the proposals were jointly submitted by the Office of the Attorney General and the State Corporation Commission, and one proposal was submitted by the State Corporation Commission. Two of the joint proposals were in the reinsurance area, three of the joint proposals were in the antitrust area, and two of the joint proposals were in the availability and affordability area. The State Corporation Commission's proposal was in the availability and affordability area.

    During 1989, the joint subcommittee focused on and reviewed the following issues:

    • Whether primary insurers should be required to provide to the State Corporation Commission specific cost information associated with their reinsurance practices;

    • Whether a detailed disclosure of corporate information should be made when an insurer reinsures with an affiliated company;

    • Competitiveness of and existing barriers to enter the reinsurance market;

    • Whether rate service organizations should be prohibited from filing final rates;

    • Limiting the filing of loss costs data by prohibiting the inclusion of recommended expense and profit contingency factors;

    • Whether to conform procedures for investigating and enforcing and penalties for violating anticompetitive conduct prohibited by the Insurance Code to the procedures and penalties presently found in Virginia's Antitrust Act;

    • Repeal of the antitrust exemption;

    • Whether to allow the State Corporation Commission to require interest to be paid on refunds to policyholders when it finds the premium for a line of liability insurance to be excessive;

    • Authorizing provisional rate reductions;

    • Whether there should be an increase in the amount of penalty that could be charged an insurer that filed late or nonconforming data;

    • Appropriate criteria to be used for establishing a line of liability insurance as individually-rated or "A-rated;"

    • Periodic examination of data filed relating to all medical malpractice claims opened, settled, adjudicated to judgment or closed; and

    • Insurer profitability in commercial liability lines, and how much weight should be given to profitability in a noncompetition determination.