Rhode Island lawmakers have passed a bill to relax regulation of personal lines insurance rates in the state.
The House and Senate have approved a flex-rating measure allowing insurers to increase or decrease rates by no more than five percent within a one-year period without prior approval of the state. The measure (HB 8042) takes effect immediately.
Rate changes higher or lower than five percent would still be subject to prior state approval by the Department of Business Regulation.
State Representative Brian Patrick Kennedy, chairman of the House Corporations Committee, sponsored the bill. Kennedy is also chairman of the executive committee for the National Conference of Insurance Legislators (NCOIL), whose flex-rating model served as the basis for the Rhode Island measure.
“While this bill does not go as far as the NCOIL model, which calls for a flexible range of up to 14 percent for rate filings, it is, nonetheless, a significant first step for Rhode Island,” noted Frank O’Brien, vice president and New England regional manager for the Property Casualty Insurers of America (PCI).
“This new law takes effect immediately and will allow the Department of Business Regulation to shift its focus to areas of regulation that are more important than routine rate and form filing revisions. At a time when state government resources are scarce, DBR personnel will be freed up to concentrate on other more important tasks such as market conduct of companies and financial stability rather than spending time and money to scrutinize minor increases or decreases,” he added.