Olympian reporter Brad Shannon leads in today's Olympian with the "avalanche of out-of-state money" coming into the Referendum 67 campaign. Shannon cites, for example, a $1.6 million donation from Illinois-based State Farm appearing in the campaign's PDC report.
There's a certain economic xenophobia in politics. Much is made about whether funding for a candidate or cause comes from "out of state". But this one's a bit tendentious. My State Farm agent's office, which holds four policies for me, is down the street. That big building next to I-5 in Dupont is a sizable State Farm operation. The point is, they, like many other "national" insurers, write a lot of policies for consumers and businesses in Washington.
The rest of the narrative, though, is right on: this campaign is going to cost a fortune and will engage traditional adversaries. This line is a bit puzzling, though:
If insurers spend $10 million or more, the other side likely will need $5 million to counter, said Sue Evans, spokeswoman for Approve 67. Evans said her side intends to rely on its network of consumer and labor organizations, such as Public Citizen and the Washington Education Association.
The WEA? Only the heavens know what this issue has to do with wages and working conditions for teachers.
Anyway, the R-67 debate is simple. The trial lawyers association had enough political capital to pass a law that will make it enormously easy to bring very lucrative lawsuits against insurance companies for even legitimate denial of claims. Combining an extremely low threshold for liability with unusually stringent punitive damages is like tossing bait in the water for opportunistic attorneys. Because plaintiffs would have the leverage of massive potential damages, they would extract larger and faster settlements from insurers attempting to avoid the cost, delay, and uncertainty of our court system.
And as the losses begin to increase on the legal side of the ledger, premiums should increase. Not just for businesses who purchase multiple lines of insurance, but for average consumers. A typical consumer, recall, probably has homeowner's insurance, auto insurance, life insurance, and perhaps even long-term care insurance or short-term disability insurance.
That's why it's incomplete to think of this as merely lawyers versus insurers. Consumers, business and individuals occupy the prized middle ground. What will determine the outcome is whether consumers believe that existing remedies to enforce insurance contracts are adequate, and that a law like R-67 will in fact drive up their insurance costs, lead to more litigation, and further enrich a small but prosperous corner of the legal community.
