HOUSE BILL REPORT

SHB 2651

BYHouse Committee on Financial Institutions & Insurance (originally sponsored by Representatives R. Meyers, Dellwo, Chandler, Crane, P. King and Anderson)

Regulating personal injury protection insurance.

House Committe on Financial Institutions & Insurance

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (13)

      Signed by Representatives Dellwo, Chair; Zellinsky, Vice Chair; Chandler, Ranking Republican Member; Anderson, Baugher, Beck, Crane, Day, Inslee, P. King, Nutley, Schmidt and Winsley.

House Staff:John Conniff (786-7119)

AS PASSED HOUSE FEBRUARY 7, 1990

BACKGROUND:

Most automobile insurance companies offer medical coverage, also referred to as personal injury protection (PIP) coverage, as a part of a comprehensive auto insurance policy. The Insurance Commissioner has adopted limited rules setting basic standards for the amount of coverage to be offered by insurers.

SUMMARY:

Automobile insurance companies must provide personal injury protection (PIP) coverage, as defined, to purchasers of auto insurance unless the purchaser rejects the coverage in writing.

Medical coverage benefit limits are set and the Insurance Commissioner is granted authority to adopt rules establishing minimum standards for PIP coverage.

Fiscal Note:      Not Requested.

Effective Date:January 1, 1991.

House Committee ‑ Testified For:    Scott Jarvis, Office of the Insurance Commissioner; and Steve Kratchink, Washington State Trial Lawyers Association.

House Committee - Testified Against:      Jean Leonard, State Farm Insurance and Washington Insurers; and Mike Kapphahn, Farmers Insurance.

House Committee - Testimony For:    The overwhelming majority of automobile insurance policyholders choose to purchase personal injury protection (PIP) coverage.  The coverage was devised in 1972 as a voluntary no-fault coverage.  When the coverage was first introduced, the Insurance Commissioner's office and the insurance industry agreed upon basic standards for such coverage.  Recently, some insurance companies have limited the coverage and reduced its price while still referring to the coverage as PIP coverage.  Such practices are unfair to other insurance companies offering the agreed-upon PIP coverage at a higher price and are unfair to consumers who are often unaware that the modified coverage contains limitations.  Some companies do not offer PIP coverage.  Given the value of the coverage in providing immediate benefits without regard to fault, all policyholders should be provided the coverage unless the policyholder rejects the coverage.

House Committee - Testimony Against:      Some high risk auto insurance companies do not offer PIP coverage because the coverage would be too expensive and high risk policyholders already are paying a high price for liability coverage.  While it is true that most auto insurance companies provide the coverage and most policyholders purchase it, the state should not interfere with the private market unless a clearly demonstrated problem exists.  For smaller companies, the new regulation will result in higher costs.