Tennessee lawmakers have passed a bill allowing property/casualty insurers to implement rate adjustments for personal auto and home insurance policies without prior state approval.
Insurers are urging Governor Bill Haslam to sign the so-called “flex-rating” bill (SB 777) that would allow insurers to raise or lower their rates on personal lines coverage by 15 percent without requiring prior approval from the insurance commissioner.
Under current Tennessee law, insurers must submit a rate filing to the Tennessee Department of Commerce and Insurance at least 30 days before the rate change’s effective date. The insurance commissioner may give notice that he needs additional 30 days to consider the filing. The rate change is deemed approved if the commissioner hasn’t raised an objection after the 60-day time period.
The new bill would allow insurers to change rates by an overall statewide average of 15 percent on all personal lines of coverage. Insurers would only be allowed to implement such a rate filing once per year unless the rate change combined with any other rate changes doesn’t exceed the 15 percent limit over a 25-month period.
American Insurance Association Southeast Regional Vice President Ray Farmer said the bill would allow insurers to quickly respond to market conditions to the benefit of policyholders. “Requiring insurers to wait for approval of a rate filing that is within the flex-band hinders insurers from swiftly adapting to changes in the market,” he said. “This bill will promote a more vibrant personal lines market in Tennessee to the benefit of both insurers and consumers.
The bill does keep intact the insurance commissioner’s responsibility to determine whether the rate change is inadequate or unfairly discriminatory and set a date where the rate change would no longer be effective. It the commissioner issues such a finding more than 30-days after receiving the filing, his decision would be prospective and not affect any policy issued before the effective date of the order.
Topics Carriers Tennessee Personal Lines
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