OLR Bill Analysis
AN ACT EXTENDING THE SUNSET DATE FOR PERSONAL RISK INSURANCE RATE FILINGS.
This bill extends the sunset date for the “flex rating” law for personal risk insurance (e. g. , home, auto, marine, umbrella) from July 1, 2009 to July 1, 2011.
EFFECTIVE DATE: Upon passage
BACKGROUND
Flex Rating Law
The flex rating law permits property and casualty insurers, until the law sunsets, to file new personal risk insurance rates with the insurance commissioner and begin using them immediately without his prior approval if the rates increase or decrease by no more than 6% for all products included in the filing. The new rate cannot apply on an individual basis. The law does not apply to rates for the residual market.
The law provides that an insurer may submit more than one rate filing using the 6% band to the Insurance Department in any 12-month period if all rate filings submitted within the 12 months, in combination, do not result in a statewide rate change of plus or minus 6% for all products included in the filing.
Under the law, an insurer can apply a rate increase within the 6% band only on or after a policy renewal and after notifying the insured. (The notification specifies the effective date of the increase. ) Rate filings requesting to increase or decrease rates by more than 6% must follow existing rate filing requirements (i. e. , insurers must receive approval from the department before using such new rates).
The law deems that any filings made under its provisions comply with the rating laws, except that the commissioner is authorized to determine whether they are inadequate or unfairly discriminatory. It requires the commissioner to order the insurer to stop using a rate change within the 6% band on a specified future date if he determines it is inadequate or unfairly discriminatory. The order must be in writing and explain the finding. If the commissioner issues the order more than 30 days after the insurer submitted the filing to him, the law requires the order to apply prospectively only and not affect any contract issued before its effective date.
Related Bill
The Insurance and Real Estate Committee favorably reported HB 6445, which prohibits an insurer from increasing an insured's homeowners insurance policy rate due to a claim related to a home invasion. It requires the insurer to give an insured written notice at renewal of the amount of the rate increase or penalty due to any other claim.
COMMITTEE ACTION
Insurance and Real Estate Committee
Joint Favorable
Yea |
18 |
Nay |
0 |
(03/12/2009) |