The South Carolina Senate Banking and Insurance Committee on Wednesday approved a flex rating bill supported by the American Insurance Association that would reportedly eliminate prior approval for homeowners insurance rates.
SB 686, as amended, would institute an initial flex-rating approach for personal property insurance rates, in which insurers, within 30 days of a filing, would be able to increase or decrease rates within a 10 percent band above or below the current rate without approval (this is the same as South Carolina’s current personal lines auto law). This system would then transition into a “use-and-file” method for homeowners rates, effective January 2007, provided the Insurance Director certifies there is a competitive market.
“South Carolina will be a more attractive marketplace for insurers with the passage of SB 686,” said Raymond Farmer, AIA assistant vice president, southeast region. “Flex rating moves the regulatory system toward a more competitive homeowners insurance market, which should benefit consumers by giving them more choices.”
SB 686, an initiative of South Carolina Insurance Director Ernst Csiszar, who worked with the insurance industry in crafting his proposal, was introduced during the 2003 session by Republican Sen. David Thomas.
As with all regulatory modernization proposals, AIA has measured SB 686 against its core national regulatory reform principles.
According to the AIA, it is clear that this bill will move the regulatory system in South Carolina toward a more market-based approach, which should increase competition and ultimately result in the best products for consumers at the best prices.
The National Association of Mutual Insurance Companies praised committee members for passing Senate Bill 686 out of committee.
“This bill, which follows principles outlined in the model law developed by the National Conference of Insurance Legislators, should make homeowner’s insurance rates more competitive in South Carolina, and is likely to encourage more insurers to want to do business there,” said NAMIC State Affairs Manager, David Reddick.
Reddick also commended Csiszar for his leadership in promoting this rate modernization legislation, both in his home state and now in his position this year as president of the National Association of Insurance Commissioners.
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