R.I. Reforms Personal Insurance Rates

By Mark E. Ruquet

NU Online News Service, July 8, 10:34 a.m.EDT?Insurance trade groups are hailing the enactment of aRhode Island measure that allows insurers to change rates within apermitted range without prior approval.[@@]

The bill that became law Tuesday (H. 8042A) was enacted withoutthe signature of Gov. Donald L. Carcieri. It allows insurers toincrease or decrease rates on personal insurance statewide by up to5 percent each year without prior approval from the state'sinsurance commissioner's office.

Mr. Carcieri's office did not immediately respond to a questionregarding the reason his signature was left off the bill.

Under the new law, the commissioner has 30 days to review therate change and void it at a future date if the commissioner findsit is "inadequate or unfairly discriminatory."

The Property Casualty Insurers Association of America called theadoption "a major step forward" in modernizing the state'sinsurance regulations.

Frank O'Brien, vice president for the Des Plaines, Ill.-basedassociation and New England regional manager, congratulated thegovernor and legislators for passage of the law. He also praisedstate Rep. Brian Patrick Kennedy, D- Hopkinton, Westerly, R.I.,chairman of the House Corporations Committee, who was the primarysponsor of the bill. Mr. Kennedy is also chairman of the executivecommittee for the National Conference of Insurance Legislators.

On the issue of modernization, he said the issue is not justwith Rhode Island but all states that require insurance departmentsto review "minor and mundane" issues on rates and filings insteadof allowing them to look at broader issues, such as solvency andmarket conduct.

"Rhode Island has a good department, but like all departments,they have a limited staff and a limited number of resources," henoted. "They should be allowed to look at the big picture, whichwill benefit consumers in the long run.

Laura Kersey, American Insurance Association assistant vicepresident, northeast region, said the legislation "will helpmodernize the Rhode Island insurance market. It will allow insurersmore freedom to react to market conditions and adjust their ratesup and down within the flex- band."

She called the measure "a good first step toward a free marketapproach to insurance regulation that will benefit Rhode Island'sconsumers by creating a more competitive marketplace and will allowconsumers more control over their property and casualty insurancepurchases.

"While AIA continues to advocate for a fully free market forinsurance products, this is a major step for Rhode Island, movingthe state closer to a market-based approach to regulation," Ms.Kersey added.