Insurers Now Seek Flex Rating For Alaska
By Steve Tuckey
NU Online News Service, March 20, 4:49 p.m. EST?After a defeat in Georgia earlier this month, the property-casualty insurance industry is focusing on Alaska in an effort to gain permission to set rates without prior regulatory approval, a trade group representative said.[@@]
Tomorrow the Alaska House Labor and Commerce Committee will hold hearings on a bill that would permit a 10 percent flexibility band for insurers to file rate changes without having a regulator sign off first.
"I think there is a good chance we may get real reform this year in Alaska," said Sam Sorich of the Property-Casualty Insurers Association of America (PCI).
On March 11, the Republican-controlled Georgia House failed to send a bill to the Senate that would impose a similar "flex-rating" on personal lines insurance. The vote to kill the bill was 138-42.
David Reddick, state affairs manager for the Indianapolis-based National Association of Mutual Insurance Companies, said the bill would have implemented a 6 percent flex band for personal lines and imposed a 9.9 percent cap on changes for individual policies. The bill also included a sunset provision.
Mr. Reddick said that a similar bill also died in committee in Mississippi earlier this year.
"It is difficult to get regulators and lawmakers to see the advantages of flex-rating," Mr. Reddick said. "I think what was encouraging was the fact that the impetus for this [Georgia] bill came from new Republican members and not the industry."
Flex-rating is the interim step that permits insurance companies latitude within a certain percentage of instituting rate changes without regulatory approval, Mr. Reddick said.
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