Richard Davis reported Friday on the OFM fiscal impact assessment of R-67. While it's impossible to quantify just how much insurance costs will skyrocket if R-67 becomes law, the fact OFM predicts just that should silence one of the trial lawyer criticisms of the Reject 67 campaign. These critics have maintained that R-67 opponents are Chicken Littles about higher insurance costs.
But it follows like night from day that if a new kind of lawsuit is created, with a very low standard ("unreasonableness") for imposing very high liability (triple punitive damages), there will be more lawsuits and they will exact a financial toll on insurance companies that will ultimately be recouped through higher insurance premiums for consumers.
That OFM predicts just that effect for public purchasers of insurance adds a nice third party confirmation.
By the way, what is the contribution to the state of Washington by those much-maligned "out of state" insurance companies the legislature saw fit to assail with the Orwellian "Insurance Fair Conduct Act"? According to the Office of Insurance Commissioner's 2006 Annual Report, the taxes collected on the premiums of the insurance industry in Washington amounts to $400 million into the general fund.
And the American Insurance Association puts things in further perspective in their fact sheet on Washington State. Using 2005 numbers, the industry employed 9,400 people in Washington with a payroll north of $647 million. Insurers held $13.7 billion in state and local capital bonds. And paid out $4.5 billion in Washington for property and casualty losses.
Just as there are major insurers native to Washington who are part of the Reject 67 campaign, trial lawyers and the media should think twice before impugning the industry as an "out of state" interest group. Not only does such a criticism come off as awfully parochial in a global economy, but completely dismisses the substantial financial contribution to the Washington economy from a vibrant insurance industry.
