Conn. Frees Up Rating on Complex Commercial Lines

The Connecticut Insurance Department has launched a year-long pilot program that will exempt some complicated commercial rate and form filings from being initially reviewed by the state — although insurers using those forms will still be subject to an audit.

The move comes as the department tries to ease a backlog of filings — forms, rates and other legal paperwork detailing a policy — that have been sent to the state, but have not been reviewed by regulators.

When Commissioner Thomas R. Sullivan took office last year, that backlog had swelled to 3,500 filings. Sullivan said eliminating the backlog was a top priority. Since then, the backlog has fallen to about 2,500 filings, spokeswoman Dawn McDaniel said.

Most of the exempted filings involve complicated commercial coverages — such as commercial credit policies, commercial inland marine or boiler and machinery policies — which are sold to relatively few buyers, McDaniel said, and purchasers of those coverages typically consult with a lawyer while doing so.

McDaniel said the department did not know how many companies’ filings would be affected by the pilot program.

The department will review the program later this year to determine whether it should be made permanent, according to McDaniel.

Exempt in Connecticut

Under the pilot program in Connecticut, insurers will not be required to file forms, rates and rules (with some exceptions) for the following types of commercial insurance coverage:

• Manuscript policies issued to not more than three insureds in Connecticut
• Commercial inland marine
• Commercial excess and umbrella policies if the underlying policy provides limits of at least $1 million
• Commercial policies and endorsements for: Expropriate coverage, kidnap and ransom, political risk coverage, extortion risk coverage, computer fraud coverage, or trade risk coverage
• Commercial credit
• Crop and hail
• Mortgage guaranty
• Commercial flood insurance
• Boiler and machinery
• Fidelity and surety bonds (other than bail bonds)
• Manufacturer output policies with total insured values over $8 million.