New Mexico Considering Commercial Lines File and Use System

February 2, 2006

The National Association of Mutual Insurance Companies (NAMIC) and the insurance industry are working with the New Mexico Public Regulation Commission to finalize and implement proposed rate regulations that would convert the commercial lines of insurance to a “file and use” system.

“NAMIC supports the New Mexico Insurance Division on promoting rate modernization and market competition in the commercial insurance industry,” said Christian Rataj, NAMIC’s western regional manager.

In a “file and use” rating system, the insurer’s rate filing becomes effective immediately or on a future date specified by the filer. A state insurance regulator may disapprove the rate filing change, after affording the insurer an opportunity to refute, at a hearing, the regulator’s contention that the rate filing is not in compliance with state law.

“Once New Mexico formally adopts a “file and use” system, it will join the ranks of 31 other states that currently have some form of “file and use” rate regulations in place,” Rataj said.

The original draft of the proposed regulations required an insurer to submit, as part of its rate filing process, an “exhibit which displays the number of policyholders who would receive, as a result of this filing, a percentage rate change in each of the following ranges:

under -50 percent:

between -50 percent and -25.1 percent;

between -25.0 percent and -10.1 percent;

between -10.0 percent and -0.1 percent;

0 percent;

between +0.1 percent and +10 percent;

between +10.1 percent and +25 percent;

between +25.1 percent and +50 percent; and

above +50 percent.

“NAMIC and members of the insurance industry expressed concerns to the New Mexico Insurance Division that this requirement, along with the other “exhibit requirement provisions” of the proposed regulation, would create an onerous administrative burden for insurance carriers,” Rataj said.

“The industry’s reasoning was extremely influential in changing the Division’s position on the regulation,” he said. “Specifically, carriers were concerned that the provisions would increase administrative overhead expenses, create an economically prohibitive labor intensive accounting procedure, and could have a ‘chilling effect’ on carriers’ willingness and ability to facilitate market competition for the benefit of the consumer.”

The proposed rate regulations can be read at

Topics Carriers Legislation Commercial Lines Business Insurance Market Mexico

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