Connecticut Gov. M. Jodi Rell (R) is expected to sign into law a bill providing flex-rating for personal lines insurance. The measure permits insurers to adjust rates within a 6 percent flex band without first obtaining regulatory approval.
The measure, Senate Bill 410, also includes new requirements governing access to uninsured and underinsured motorist coverage.
The law sunsets after three years if not renewed by lawmakers. Insurers supported the legislation.
Flex-rating should foster a more competitive insurance market, according to the Property Casualty Insurers Association of America.
“On average, auto insurance premiums are 10 percent lower in states with flex rating or open competition than in states which require prior approval of rates,” maintained Kristina Baldwin, PCI regional manager. “In addition, under flex rating, premiums are more stable because insurers are more likely to contain rate changes to the flex band if possible, so as to avoid burdens associated with prior approval.”
Larger changes beyond the six percent band must still undergo regulatory review before going into effect. Under the current prior approval systems, all rates and rating plans must be filed and approved before going into effect.
“Connecticut is taking an important step forward with legislation that will help consumers,” said Baldwin.
The American Insurance Association also actively supported the bill. “This bill will allow insurers to respond quickly to market conditions and foster greater competition,” said Laura Kersey, AIA assistant vice president.