OLR Research Report

September 23, 2005




By: Janet L. Kaminski, Associate Legislative Attorney

You asked for information on the rate filing process for personal automobile insurance rates and whether there is any opportunity for public input during the process. You also asked for information on the competitiveness of Connecticut's automobile insurance market.


Connecticut uses a “file and use” system for motor vehicle rates, under which rates must be filed with the insurance commissioner prior to use. In a competive market place, the insurance department reviews rates to ensure they are not inadequate or unfairly discriminatory. In a non-competitive market place, it reviews rates to determine if they are excessive, inadequate, or unfairly discriminatory. Connecticut is a very competitive market for automobile insurance, according to George Bradner, Director, Property & Casualty Division, Connecticut Insurance Department.

State law does not require the department to hold a public hearing or solicit public input on rates. The filings, however, are open for public inspection. The department's consumer affairs division is available to investigate consumer complaints regarding automobile insurance rates.


Connecticut uses a “file and use” system for motor vehicle rates, which means rates must be filed with the insurance department prior to use. The requirements differ when there is a competitive market versus a non-competitive market, as determined by the insurance commissioner.

The commissioner may, without holding a hearing, disapprove prefiled rates that have not become effective, but the insurer may request a hearing within 30 days of the commissioner's decision (CGS 38a-688(b)(3)).

Competitive Market

In a competitive market, insurance companies must file rates and supplemental rate information with the commissioner on or before their effective date of the filing or the date that the premium billing notices reflecting the new rates are sent to insureds or agents, whichever is earlier. If the commissioner finds, after a hearing, that an insurer's rates require close supervision because of the company's financial condition or unfairly discriminatory rating practices, the insurer must file rates with her at least 30 days before their proposed effective date (CGS 38a-688(a)(1)).

The commissioner will disapprove a rate for use in a competitive market if she finds that it is inadequate or unfairly disciminatory (CGS 38a-688(b)(2)).

Non-Competitive Market

If the commissioner finds that a reasonable degree of competitiveness does not exist in the market, rates and supplemental rate information must be filed with her at least 30 days before their proposed effective date. The commissioner may extend this time by an additional 30 days if she gives the insurer written notice during the first 30 days. Unless the commissioner disapproves the rates within the waiting period or extension, they are deemed approved and can become effective as proposed (CGS 38a-688(a)(2)).

The commissioner will disapprove a proposed rate in a non-competitive market if it is excessive, inadequate, or unfairly discriminatory. If she disapproves the rates, she must send the insurer written notice, indicating why the rates do not meet the required standards and stating that the rates shall not become effective (CGS 38a-688(b)(2)).


The following information is from the insurance department's Annual Rate Review Report to the Insurance and Real Estate Committee, dated January 15, 2005. In 2004, the department received and reviewed 77 rate filings from 50 of the companies actively writing private passenger automobile insurance in Connecticut. (There are many more companies also actively writing the insurance that did not file for a rate change, according to Mr. Bradner.)

The department's examiners and actuary review the cost components of each rate filing and compare these to similar components determined by the department. If the company's estimates exceed the department's estimates to an unreasonable degree on a composite basis, the department considers the excess as one indication that the market may not be reasonably competitive.

A rate review takes into account such factors as use of investment income, trending, loss development, and expenses. The department also monitors filings for substantial changes in underwriting standards, which also can signal a change in market competitiveness.

The department tests for unfair discrimination. Its primary check is to verify that territorial rates have been established in accordance with the commissioner's “Memorandum of Decision Declaratory Ruling” dated December 4, 1978. Two key points are (1) loss costs are moderated and (2) general expenses and other acquisition and miscellaneous taxes are based on flat dollar amounts in establishing base rates.

The largest increase, decrease, and overall average statewide rate level changes filed and approved in 2004 are shown in Table 1.

Table 1: Personal Automobile Insurance Rate Change (2004)


Largest Increase

Largest Decrease

Average Change





Physical Damage









As soon as they are filed, all rate filings are available for public inspection at any reasonable time. Copies may be obtained by any person on request and upon payment of a reasonable charge (CGS 38a-688(a)(4)).