Sometimes I question the wisdom of my industry’s government relations teams and lobbyists. Consider, for example, this article in Insurance Journal
In a victory for the insurance industry, a Delaware Superior Court has ruled that the state’s insurance regulator overstepped his authority when he prohibited property insurers from refusing to renew a homeowner policy based solely on whether the insured had filed a recent claim or made an inquiry.[...]
In June 2005, the Delaware Senate passed a measure (SB 173) that would have prohibited insurance companies writing homeowners insurance policies from canceling or non-renewing those policies “based on the claims history of an insured for weather-related claims, unless there were three or more weather-related claims within the preceding three year period.” SB 173 also prohibited an insurer from counting inquiries, minor claims, and unpaid claims as claims. However, the bill never became law because it failed to pass the Delaware House of Representatives; it never got out of the House Economic Development, Banking and Insurance Committee.
On August 1, 2005, only weeks after the close of the General Assembly’s session, Denn proposed a regulation to largely accomplish what the legislation would have done. His regulation established two new unfair trade practices: the consideration of any non-claim contact by an insured as a claim for underwriting purposes; and the non-renewal of homeowners insurance policies based solely on the claims filed against that policy.
Commissioner Denn did issue that regulation (available at delaware.gov)
Now, I can understand and agree with the concept of legislating by regulatory fiat being a bad enough idea to merit legal challenge. I also am on board with the idea of avoiding bloat within the definition of “unfair trade practices”.
However, there is a significantly weighty body of public opinion that argues that nonrenewing a personal lines insurance policy just because of bad weather, or other contact with the insurer, is unfair. If the insurance industry chooses to fight that belief, while it may win regulatory, legislative, and judicial wins, it will lose the public relations war.
Heck, the regulation still seems to permit insurers’ withdrawal from certain portions of the market (e.g., to reduce risk aggregation), and it does permit nonrenewal if a homeowner fails to take risk reduction measures recommended in the wake of multiple claims.
Thus, the regulation, on the surface at least, doesn’t seem horribly unreasonable. It satisfies public concerns of fairness, and it doesn’t seem too onerous for the insurer in theory. (Actual implementation and interpretation of the now-dead reg could have been nasty, I suppose, but I digress….)
I’m not sure this is a battle the insurance industry should have sought to fight. We may have won, but it’s another weapon we’ve just handed the consumer advocates to use against us in the larger PR war.