Legislation introduced by New York State Senator James Seward (R-C-I/Milford) to modernize insurance regulation of property/casualty insurance rates will stimulate competition to the benefit of consumers, according to the New York Insurance Association (NYIA)
The proposal by Sen. Seward (S. 6550), who is chair of the Senate Insurance Committee, retains state oversight of property/casualty insurance, while introducing market-based pricing for both commercial and personal lines.
“Senator Seward’s innovative bill would place New York at the forefront of states which have successfully stimulated competition to the benefit of consumers by ending government price controls,”said Bernard Bourdeau, president of NYIA. “This will allow insurers to respond quickly to consumer demand for new products and changing market conditions.”
Bourdeau also noted that the bill creates consumer safeguards by providing that rates and policy forms will be subject to prior approval by the regulator if a particular insurance market is found to be non-competitive by objective criteria.
The objective standard the proposed legislation uses to determine whether a particular market is non-competitive is the same one used by the Federal Trade Commission and the U.S. Justice Department in evaluating mergers for anti-trust purposes.
Under the proposed measure, normal oversight by the insurance department would still apply – rates cannot be excessive, inadequate, destructive of competition or unfairly discriminatory and policy forms cannot be misleading or violate state law.
“Senator Seward’s modernization bill allows for insurers to respond quickly to consumer demands and to loss costs in competitive environments while ensuring protections to consumers when the market is not competitive,” said Bourdeau.
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