The South Carolina Senate Banking and Insurance Committee’s recent favorable report on a bill creating “flex band” rating for homeowners and fire insurance is reportedly an encouraging first step toward passing legislation that will replace the state’s prior approval rating law for these lines.
“The bill, which has the backing of Insurance Director Ernie Csiszar, would enable insurers to react quickly to changes in market conditions,” said Robert Herlong, Southeast regional manager for the Property Casualty Insurers Association of America (PCI).
S.B. 686, introduced late during the 2003 legislative session at the request of Csiszar, would allow insurers to implement rate changes of up to 10 percent without prior Department approval. The bill would become effective after gubernatorial approval and remain until Jan. 1, 2007. After that date, if the director determines a competitive market exists, the system changes to “use and file” without regard to the percentage of rate adjustment implemented.
During the committee hearing earlier this week, Csiszar commented that his flex band suggestion was patterned after the state’s successful automobile insurance reform legislation implemented in 1997. He also expressed hope that a competitive rating law would help address a “significant capacity problem” which has resulted in availability and affordability issues for property insurance in coastal areas.
The legislation now goes to the Senate for debate on the floor, where prospects for passage are “reasonably optimistic,” Herlong said. “PCI applauds the leadership of Director Csiszar and the support of the Senate Banking and Insurance Committee and its chairman, Sen. David Thomas. (R-Greenville).”