La. House Advances Bill to Abolish Insurance Rating Commission

Days after the Louisiana Senate voted to require that all insurance rate changes be approved by the Louisiana Insurance Rating Commission (LIRC), the Louisiana House Insurance Committee approved House Bill 1115, which would abolish the state’s Insurance Rating Commission and transfer its functions to the commissioner of insurance. In addition the bill would establish a file and use rating system, according to the Property Casualty Insurers Association of America.

“The elimination of the Insurance Rating Commission is a positive step,” said Greg LaCost, assistant vice president and regional manager for PCI. “Louisiana is the last state in the country to conduct business through a rating commission. These systems are a hold over from a bygone era. In the past Louisiana has operated under a stringent prior approval system that hampered competition in the state. In 2003 the Legislature embraced a more market-driven system and put in place a flex-rating system. This legislation with its file and use system counters the negative approach to regulation being proposed in SB 693, which would repeal the state’s successful flex-rating law.”

Under the current regulatory system, the LIRC approves rate changes brought by insurers that are greater than 10 percent. Under this bill, insurers would be able to use rate changes after the department’s approval or 45 days after the rate filing. In addition all of the duties and responsibilities of the commission would be given to the Department of Insurance.

Rating commissions add an additional layer of regulation that is unnecessary. “Over-regulation adds costs, hinders competition and limits consumer choice. Consumers are better served when states operate more market-oriented approaches to insurance regulation,” said LaCost.

Source: PCI

Topics Legislation Louisiana