Kansas Governor Signs Flex Rating Bill

Kansas Gov. Kathleen Sebelius recently signed legislation, HB 2689, the Flex Rating Regulatory Improvement Model Act, that proponents of the legislation say will modernize the rating system in Kansas.
The National Association of Mutual Insurance Companies (NAMIC) supported the flex rating proposal.

“NAMIC applauds Governor Sebelius and the Kansas Legislature for adopting this critical piece of legislation,” said Joe Thesing, NAMIC’s director of state affairs. “Adoption of HB 2689 will benefit consumers by encouraging more insurers to enter the market, thus enhancing competition.”

Thesing, who led off industry testimony in the Senate and House, said the bill is based on the National Conference of Insurance Legislators’ Flex-Rating Model Act and will create a flex-rating system allowing property/casualty insurers to increase or decrease rates up to 12 percent without regulatory approval. The bill also preserves the insurance department’s authority to stop a rate filing if it is deemed inadequate or unfairly discriminatory.

The Kansas Department of Insurance officially supported HB 2689, and officials stated during the legislative process that they recognize that modernization is necessary in order to improve competition and, ultimately, preserve the state-based system of insurance regulation, Theising said.

The bill is the by-product of a unanimous recommendation made last year by the Kansas Insurance Department Fee Modernization and Rating Laws Task Force. The task force was established to study personal lines regulatory modernization and other topics.

The model was overwhelmingly adopted by NCOIL in 2003 and is viewed as an interim step toward rate regulation based on an open-competition system. With enactment, Kansas becomes the ninth state to adopt a flex-rating law.

“Passage of this bill will send a strong message to Congress that states can improve and modernize the state system of insurance regulation,” Thesing added.