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For release: October 31, 2001
FOR INFORMATION:
Mary Bonelli/Mitch Wilson, OII: 614-228-1593
Todd Boyer, Ohio Department of Insurance: 614-644-3481
BILL TO HELP STABILIZE UNINSURED MOTORISTS INSURANCE MARKET
BECOMES EFFECTIVE
COLUMBUS--A bill, backed by a broad spectrum of auto insurance
consumers affected by increased costs and limited availability
of uninsured and underinsured motorists (UM/UIM) insurance,
goes into effect today. SB 97, sponsored last spring by Senator
Scott Nein (R-Middletown), seeks to restore stability to the
UM/UIM insurance marketplace by removing the mandatory offering
requirement that served as the basis of several Ohio Supreme
Court decisions that negatively affected UM/UIM cost and availability.
A number of major insurance companies stopped writing new
business and/or increased auto insurance premiums to address
additional claims exposure resulting from UM/UIM rulings of
Ohio's high court.
"The repeal of the statutorily mandated offering of
UM/UIM coverage goes a long way in improving its availability
and stabilizing auto insurance premiums associated with this
coverage," said Daniel J. Kelso, president of the Ohio
Insurance Institute, an organization that supported passage
of the legislation. "SB 97 brings UM/UIM coverage into
uniformity with all other coverages offered by insurers under
personal and commercial auto insurance policies."
According to Kelso, prior to the passage of SB 97, policyholders
opting to reject UM/UIM auto insurance coverage or choosing
lower coverage limits were required to sign waiver forms.
This sign-off process was only required for UM/UIM coverage.
The UM/UIM statute and waiver process served as the basis
of several Ohio Supreme Court rulings that expanded coverage
beyond its defined intent and caused a potential availability
problem, especially for Ohio businesses. In a December, 2000
decision, Linko vs. Indemnity Insurance of North America,
the Court went so far as to invalidate the UM/UIM rejection
forms used by insurers,
"It's doubtful that Ohio auto insurance consumers will
experience any significant change in how auto insurance coverages
are offered based on this law going into effect," said
Kelso. "Insurance companies and agents are obligated
to inform policyholders of auto insurance coverages that are
readily available to them and failure to properly inform them
can subject agents to a malpractice claim."
"Most people don't recognize that one out of eight drivers
do not have auto insurance. The best way to protect yourself
from uninsured drivers is to purchase uninsured motorist coverage,"
said Lee Covington, Director of the Ohio Department of Insurance.
"Families and individuals have never had a problem buying
uninsured motorist coverage. However, over the past year,
businesses have had a hard time. Governor Taft and the legislature
recognized this and drafted this law to address that problem."
Besides eliminating the mandatory offering of UM/UIM coverage,
other provisions of SB 97 include:
- Permitting exclusions in UM/UIM coverage under an employer's
commercial auto insurance policy when the employee is not
acting within the scope of employment.
- Limiting policyholder UM/UIM claims to a three-year period
- Monitoring of the UM/UIM market by the Ohio Department
Insurance and reporting on its status to the General Assembly
within two years of the bill's effective date.
The Ohio Insurance Institute is a trade and public information
association representing insurance companies and agent groups
for the property/casualty insurance industry. A primary objective
of the OII is to help Ohioans achieve a better understanding
of insurance and related safety issues.
The Ohio Department of Insurance provides consumer protection
to Ohio's insurance policyholders through financial solvency
regulation, market conduct regulation and consumer education.
For more information, please see the consumer
guide to UM/UIM coverage, a handy Q & A on this coverage.
NOTE: For background information on SB 97, go to:
www.competitiveohio.org
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