Insurers Now Seek Flex Rating For Alaska

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By Steve Tuckey

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NU Online News Service, March 20, 4:49p.m. EST?After a defeat in Georgia earlier this month, theproperty-casualty insurance industry is focusing on Alaska in aneffort to gain permission to set rates without prior regulatoryapproval, a trade group representative said.[@@]

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Tomorrow the Alaska House Labor and Commerce Committee will holdhearings on a bill that would permit a 10 percent flexibility bandfor insurers to file rate changes without having a regulator signoff first.

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"I think there is a good chance we may get real reform this yearin Alaska," said Sam Sorich of the Property-Casualty InsurersAssociation of America (PCI).

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On March 11, the Republican-controlled Georgia House failed tosend a bill to the Senate that would impose a similar "flex-rating"on personal lines insurance. The vote to kill the bill was138-42.

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David Reddick, state affairs manager for the Indianapolis-basedNational Association of Mutual Insurance Companies, said the billwould have implemented a 6 percent flex band for personal lines andimposed a 9.9 percent cap on changes for individual policies. Thebill also included a sunset provision.

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Mr. Reddick said that a similar bill also died in committee inMississippi earlier this year.

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"It is difficult to get regulators and lawmakers to see theadvantages of flex-rating," Mr. Reddick said. "I think what wasencouraging was the fact that the impetus for this [Georgia] billcame from new Republican members and not the industry."

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Flex-rating is the interim step that permits insurance companieslatitude within a certain percentage of instituting rate changeswithout regulatory approval, Mr. Reddick said.

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