Insurance companies rebel against new insurance law

In May 1990, Aetna Casualty and Surety announced plans to pull out of the Pennsylvania car insurance market and notified their 200,000 customers that the company would not be renewing their policies. This move was in response to a new insurance law, Article 6, which stipulated that all motorists’ rates should be reduced by 10 percent. The law further stipulated that car insurance rates should drop by 22 percent if the policy holder gave up their right to sue in most instances.

Aetna and other insurance companies argued that the law was an abuse of governmental powers. They claimed that it was an attempt to shift responsibility for public welfare from the government onto private companies. By mandating insurance premiums, the state government was sidestepping the necessity to impose unpopular taxation.

Governor Casey takes on big business

Pennsylvania’s governor at the time, Robert P. Casey (1932-2000) blasted the industry complainers for pulling out of the state’s car insurance market. In a letter to the president of Aetna, Governor Casey described their action as ‘arrogant and callous’ and vowed that the state would use all means at its disposal to enforce the new law. 

The Pennsylvania Insurance Department filed a cease-and-desist order against the company in an effort to force them to stop sending out renewal notices and reinstate those customers who had been dropped. Aetna was not the only company to rebel. Both Safeco and Harleysville Mutual went to court against the state, rather than settling through a mediation process. At one time, there were two dozen separate lawsuits protesting against Article 6.

Within a matter of weeks, the two sides had reached a compromise and Pennsylvania’s motorists were not forced to drive illegally, without insurance. Today, drivers are offered car insurance with limited tort, meaning limited ability to sue for damages for ‘pain and suffering’, at a discounted rate. Motorists wishing to preserve the right to sue are offered coverage at a higher premium. This arrangement is referred to as ‘full tort.’

Robert P Casey (1932-2000)

Governor Casey served as Pennsylvania’s 42nd governor from 1987 to 1995. Before that, he was in the state senate (1963-1968) and Auditor General (1969-1977). He lost his first three attempts to become governor and went on to serve two terms. He won both elections by substantial landslides.

Securing lower rates for automobile insurance was just one of Carey’s accomplishments in the aid of ordinary citizens. During his term in office, Pennsylvania ranked number one in collecting child support from absent fathers. Resources were channeled into child nutrition and other child welfare issues. 

Governor Casey and his wife, Ellen, had eight children. Diagnosed with a rare, inherited form of amyloidosis, a disease in which accumulated proteins cause damage to the internal organs. Casey survived a heart/liver transplant in 1993, resuming his duties as Governor just six months later. He eventually succumbed to amyloidosis in 2000.

At the end of his eight-year tenure in the Governor’s Mansion, he was described as a folk hero and a builder, having left Pennsylvania a better place.