The Insurance Research Council has released a new study today, whose findings show that the cost of homeowners insurance in Washington has raised. The IRC study investigated the influence the Insurance Fair Conduct Act had on the market. The study compares the frequency of claims and trends in losses for Washington and four other states that have similar laws. Given the information, the study finds that the cost of insurance has gone up over two years, reaching the $190 million mark.
“The facts are in and the bottom line is the law is leading to higher costs for customers,” says the assistant vice president for Property Casualty Insurers Association of America, Kenton Brine. Brine believes that frivolous lawsuits associated stemming from some insurance policies is to blame for rising costs.
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Washington law requires plaintiffs in such lawsuits to notify the state’s Insurance Commissioner 20 before a bad faith lawsuit is filed. Since the law was implemented back in 2007, the commissioner’s office has received thousands of notices of lawsuits being filed in the state. PCI says that some of these notices are over 400 pages long. Furthermore, more than 150 lawsuit notices have been sent in the first three months of 2011.
According to the Insurance Research Council study, insurers are being forced to settle more claims with little investigation into whether they are fraudulent. The study suggests that prices will continue to increase because of costly litigation in the future.