INDIANAPOLIS, Ind., March 20 – A bill (HB-5463) that would allow auto insurers to adjust rates within a predetermined percentage range without obtaining prior regulatory approval has been reported favorably out of the House Insurance and Real Estate Committee. However, the National Association of Mutual Insurance Companies (NAMIC) noted that lawmakers made two substantial changes to the proposal prior to reporting it out of committee: they lowered the deviation percentage from 12 percent to 4 percent, and they inserted a two-year sunset.

As NAMIC put it, A Connecticut legislative committee took a tentative step on the road to insurance rate modernization, but also posted a Road Closed sign that must be obeyed in two years.

Paul Tetrault, Northeast state affairs manager for NAMIC, said, While any liberalization of rating can be viewed favorably, insurers should be given more freedom to adjust rates in response to changing market conditions. We are hopeful that the deviation level can be increased as the bill moves through the legislative process.

Tetrault also said that the two-year sunset inserted by the committeeis cause for concern because any move towards enhanced competition needs to be given time to work in the marketplace.

In testimony submitted to the committee on March 2, Tetrault told lawmakers that Connecticuts auto insurance market would benefit greatly from the enactment of legislation allowing insurers leeway to make meaningful adjustments to their rates in response to changing market conditions. He said, Greater rating freedom makes it easier for insurers to lower rates in a competitive environment because they know they can respond appropriately if market conditions change. It also keeps rates stable by allowing insurers to make refined rating decisions.