State and regional leaders have identified and addressed numerous “cost of doing business” issues to help establish and retain our global competitiveness for business growth.

One important area that doesn’t much receive attention is the cost of insurance. Unfortunately, the Legislature has just produced an unneeded solution that threatens to dampen economic growth.

ESSB 5726, an attempt to reform the insurance industry, is on the governor’s desk. The bill provides incentives to sue insurance companies for triple damages if people feel that they haven’t been given their due in regard to coverage or payments.

Granted, few citizens are worried about the health of large insurance companies, but the problem with the bill is not what it will do to the big guys. The problem is the collateral damage from encouraging more lawsuits and their costs to consumers. Insurance companies will find a way to pay for the litigation, but guess where it will come from? The pockets of consumers and businesses, small and large.

Beyond that, one can’t help but ask if it’s in anyone’s interest to provide incentives for prolonged court battles when there is not even a problem to be fixed. The storm of lawsuits provoked by the promise of treble damages could overwhelm a system that already provides several avenues of redress for insurance consumers and businesses. Anyone who believes they have received mistreatment at the hands of insurers can file a complaint with the state insurance commissioner, sue under breach of contract, sue under tort for bad faith or bring a claim under the Washington Consumer Protection Act.

That the system is working well is illustrated by a storm of a different sort: the windstorm that smashed into Western Washington earlier this year. Within less than four months of the event, according to a recent study, 90 percent of the 42,000 claims were settled, for $170 million in compensation. Most of the remaining claims remained unsettled due to lack of qualified contractors or the time needed to rebuild homes. Only three complaints were filed with the insurance commissioner’s office.

University of Washington law professor Karen S. Weaver performed an analysis of ESSB 5726 and found that the proposed law would “increase costs without concurrent benefits to the public.”

In her analysis she cites the following “unavoidable truths”:

 • There is no money paid out by insurers that has not been collected as premium from the consumer.

 • When loss expense and/or legal expenses go up, premiums must go up.

 • If an insurer must pay treble damages and plaintiff attorney fees, those costs must be passed along to the consumer.

Given that inevitability, we should be careful what we do to “fix” the insurance industry. The first question to ask is whether there’s a problem. As the windstorm experience indicates, there is not a problem with claims being paid. The fact that there are already multiple avenues of redress in state law, including complaints to the independently elected state insurance commissioner, also weighs against encouraging more costly lawsuits.

Taken altogether, this shows that ESSB 5726 is an unnecessary and wasteful bill that, if signed into law, will likely cost consumers and businesses millions and add an unnecessary drag on our still-recovering economy. We call on Gov. Gregoire to veto ESSB 5726.

David Graybill is president and CEO of the Tacoma-Pierce County Chamber of Commerce. Len Zarelli is president of the Merit Co. construction firm and a member of Associated General Contractors.