Colorado Evaluating Proposed Insurance Rate Filing Rule

January 16, 2009

The Colorado Division of Insurance continues to evalute regulation 5-1-10, Rate and Rule Filing Submission Requirements for Property and Casualty Insurance.

The rule was proposed to “ensure that property and casualty insurance rates are not excessive, inadequate or unfairly discriminatory.” However, the regulations as proposed would have had 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.

PCI Regional Manager Kelly Campbell said her organization is concerned with some of the negative aspects that could result from the rate filing regulations. “The proposed regulation contained vague and confusing requirements,” she said. PCI hopes the DOI will terminate the proposed regulation “to ensure that Colorado customers continue to benefit from Colorado’s healthy and competitive insurance marketplace.”

Among the changes PCI has issue with include:

-Increasing the time period for the Division to review incomplete filings from 15 to 30 days. PCI cited the proposed change as 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 cited this proposed requirement as inconsistent with Colorado’s file-and-use system and noted that it 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 was the proposed language unclear as to whether profit would refer to underwriting or operating profit, the same profit load for auto and homeowners would have been inappropriate, as auto and homeowners insurance are two very different products with different risk exposures.

For information, visit www.dora.state.co.us/pls/real/SB121_Web.Show_Rule?p_rule_id=2968.

Sources: DOI, PCI

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