The National Association of Independent Insurers called on Louisiana Gov. Mike Foster to promptly sign a bill that the NAII says would provide more flexibility to the state’s insurance rate-making process while maintaining government oversight of insurance rates.
“Senate Bill 721 is a modest step toward regulatory modernization, a balance between those who prefer a fully-regulated market and those who desire a free-market approach,” NAII President Jack Ramirez wrote in a June 4 letter to Gov. Foster. “By signing this bill, (Gov. Foster) will help modernize the Louisiana insurance regulatory system and enhance competition and choice for the state’s citizens.”
Louisiana currently is experiencing an insurance availability and affordability crisis. During the past decade, the number of companies offering property insurance coverage in Louisiana has dwindled from about 120 to less than 20-and few of those that remain write new policies. The Bayou State also posts the second highest average property premiums, and the eighth highest automobile insurance rates in the country, according to the NAII.
“Repeated attempts to improve the insurance market by moving the state from a politically driven regulatory system to a more competition driven system have failed,” Ramirez wrote. “SB 721 can now end this troubling chapter in Louisiana history.”
SB 721 would allow insurance companies to raise or lower rates by up to 10 percent within a year without appearing before the Insurance Rating Commission for approval. Rate increases would not be automatic. Insurers would still have to appear before insurance department actuaries to request and justify any rate change. Rate changes exceeding 10 percent would require approval by both the rating commission and the insurance department.
“The proposed flex-rating system would give companies more freedom to charge rates and price products at levels adequate to cover costs and make a reasonable profit,” Ramirez wrote. “With this type of incentive, companies would enter or return to the Louisiana marketplace. When companies compete, consumers win. More companies in the state means a greater variety of products and prices, giving consumers greater choices, better service and better rates than found in highly-regulated markets.”
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