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by KEVIN TAYLOR & r & & r & & lt;span class= & quot;dropcap & quot; & T & lt;/span & his year's candidate to be the White Rabbit/Through-the-Looking-Glass most surreal political campaign is the multi-million dollar effort to reject Washington's Referendum 67, in which a white-collar industry masquerades as a consumer group agitating to defeat consumer-protection legislation.





This is the one where, in an oft-played television commercial, sharkskin attorneys - excuse me, Trial Lawyers! - gather at the firm of Sooem, Settle & amp; Kashin to discuss the rape and pillage of unsuspecting insurance companies and their customers. "Betty, you take Spokane. Lou, you have Renton. Triple damages all around. Ha-harrrggh!"





The commercial is paid for by insurance companies.





The commercial is paid for by insurance companies that have raised nearly $9 million while calling themselves "Consumers Against Higher Insurance Rates."





Consumers Against Higher Insurance Rates, according to Public Disclosure Commission forms (www.pdc.wa.gov), may have only two actual donors -- a lighting company owner from Seattle who contributed $200 and a guy from Tumwater who chipped in $50. The rest of the $8,729,448.40 comes from big insurance firms from around the nation.





State Farm has contributed $1.6 million from its headquarters in Bloomington, Ill. Safeco sent in $1.3 million from its offices in Seattle. The Farmers Group Inc. has tossed in $1.5 million from Los Angeles. Out of 58 contributions, only 11 are from Washington.





And the money is coming in buckets these last two months -- $6 million of the $8.7 million has been raised since August. The attorneys -- er, Trial Lawyers! -- around the state have just this week cracked their first million for the Approve 67 campaign, relying on 428 contributors and have just launched their first TV ad.


"There is no way we can begin to compete," says Spokane attorney Roger Felice, one of 17 attorneys from Spokane, Deer Park and Colville who have contributed to Approve 67.





"My understanding is they plan to raise $12 million," Felice says of the insurance industry. "How much money must they be making to spend $12 million to fight a good consumer protection bill?"





Root Causes


In R-67, the insurance industry is asking voters to overturn Senate Bill 5726, known as the Insurance Fair Conduct Act, passed in April and intended to stop insurers from unreasonably denying or stalling legitimate claims from customers.





The act covers everything except health insurance, which already has consumer protections through the Patients' Bill of Rights.





Gov. Christine Gregoire signed SB 5726 into law May 15 after trying, and failing, in negotiations to address industry concerns. Ken Gibson, western region vice president for the American Insurance Association, expressed the industry's regrets and then hired signature collectors to quickly get R-67 on the ballot.





The industry predicts the Fair Conduct Act, with its provision that insurers may have to pay triple damages and attorney fees, will spark lawsuits and drive up premiums. On Sept. 24, the insurance industry announced a study by Milliman Inc., a national actuarial firm, predicting insurance rates in Washington will rise by $650 million a year.





Premium on Complaints


The number of people complaining to the state insurance commissioner about how they are treated by their insurance companies is pretty steady at 2,500 a year.





"I was talking about consumer issues with counterparts from the Utilities and Transportation Commission and when I told them how many inquiries we get a month, they were startled," says Stephanie Marquis, spokeswoman for the insurance commissioner's office.





Complaints by policyholders that their insurers were stalling, low-balling or denying claims covered by policies ran 2,760 in 2006, 2,544 in 2005 and 2,463 in 2004. Marquis says that typically each year the insurance commissioner finds roughly 330 complaints where insurers violated a law or regulation.





This does not mean the rest of the complaints are bogus, Marquis says. The office offers advice to customers to level the playing field in a claim dispute. "There is often confusion on the part of the customer as to their policy limits or how their policy works," Marquis says.





For example she cites the office's top complaint: when an insurer declares a policyholder's vehicle a total loss after a wreck and then differs with the customer on the value.





"People will say the Kelly Blue Book says my car is worth this much, but that is not what insurance companies use. We don't get involved in setting amounts but we do tell the consumer how to find the calculation," Marquis says.





Spokane attorney Felice agrees the biggest part of this dispute is customers feeling they are being jacked around in an unfair fight on routine claims, and he says the law is meant to address that.





"Let's say someone gets a bill for $500 and they turn it in to their insurance company and the company comes back and says 'We think $400 is reasonable.' They know people aren't going to hire a lawyer for $100," Felice says. "The $100 here and $150 there adds up to a lot of money [the insurance industry] is saving. For them it becomes a major, major game to keep that type of conduct in play."





Industry advocates say Washington's law allows lawsuits claiming "unreasonable" conduct by the insurer instead of a finding that a specific law or regulation was violated.





The Milliman study cites examples in Rhode Island, Texas, Oklahoma, Louisiana and Georgia as indicators that similar laws drove up insurance costs. The authors of the study, David Appel and David Chernick would not be made available for comment, Milliman spokesman Jim Loughman told The Inlander.





Industry news accounts of the Milliman study say it corroborates a finding of higher insurance costs made by Washington's Office of Financial Management, but this is a little slippery.





The OFM analysis stresses several times that "research offers no clear guidance for estimating the magnitude of these potential increases." The OFM conservatively predicts a rise of $50,000 in legal costs based on an estimated 300 lawsuits filed per year -- apparently based on the average 330 cases per year where an insurer is found to be in violation of a law.





The insurance industry predicts, however, a stampede of lawsuits with the prospect of triple-damage awards driving up the cost of insurance.





The possibility of a customer winning triple damages in a lawsuit is needed, Felice says, or insurers have no incentive to settle legitimate claims reasonably -- they would merely have to pay what their own policy promised to pay in the first place.





The Fair Conduct Act "requires them to pay legitimate claims," Felice says. "What more can you ask them to do? They are being asked to pay legitimate claims in a fair manner. This is why the Legislature passed it and why the governor signed it and it's why people need to take a look behind the scenes."
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