Colorado Proposes Rate Filing Changes

January 5, 2009

Colorado’s Division of Insurance is proposing to amend regulation 5-1-10, Rate and Rule Filing Submission Requirements for Property and Casualty Insurance, “to ensure that property and casualty insurance rates are not excessive, inadequate or unfairly discriminatory.” However, the regulations as proposed would have a negative effect on the state’s rate filing process, according to testimony delivered by the Property Casualty Insurers Association of America (PCI) to the DOI.

Among the changes proposed, the DOI wants to:
– Make all rate, rule and loss cost filings be submitted electronically by licensed companies, rating organizations and advisory organizations (except for conditions provided by regulation). The proposed rules also would change the time the DOI has to identify deficient filings, communicate with the insurer, and reject incomplete filings.

-Require companies to submit rate filings whenever there is a new program, new product, or the rates charged to the new or renewal policyholders change.

PCI indicated it is concerned with the changes in timeframes to review filings, the requirement for an annual filing and the profit load requirements. “In addition, unclear language and overall vagueness surrounding some of the amendments leaves companies with many questions about how to comply with the proposed changes,” said Kelly Campbell, PCI regional manager.

In its testimony, PCI asked Commissioner Marcy Morrison to consider negative effects that could result from the proposed changes, specifically:

-Increasing the time period for the Division to review incomplete filings from 15 to 30 days. PCI believes the proposed change is in direct conflict with current Colorado statute.

-Requiring all companies writing homeowners and private passenger automobile insurance to submit rate filings on an annual basis. PCI believes this requirement is inconsistent with Colorado’s file-and-use system and would diverge from nationwide regulatory trends. No other file-and-use state in the country requires an annual filing.

-Requiring detailed support to be provided for any proposed profit load in excess of 7 percent after taxes for private passenger automobile and homeowners insurance. “Not only is the current language unclear as to whether profit refers to underwriting or operating profit, the same profit load for auto and homeowners is inappropriate,” Campbell said. “Auto and homeowners insurance are two very different products with different risk exposures, and we believe the Division should take that into consideration.”

“Vague and confusing requirements for insurers exist throughout proposed amended regulation 5-1-10,” Campbell said. “The Division needs to address the industry’s concerns on this regulation to ensure that Colorado customers continue to benefit from Colorado’s healthy and competitive insurance marketplace.”

For more information on the proposed regulation, visit

Sources: DOI, PCI

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