Flex Rating To Start July 1 In Connecticut

Insurers operating in Connecticut next month will be able make limited changes in personal lines rates without regulatory permission.

Under a bill–effective July 1–signed into law last week by Connecticut Governor M. Jodi Rell, the state will establish a flex-rating system allowing insurers to adjust rates within a six percent rating band without prior approval.

The bill, which has a three-year sunset provision, was strongly supported by the major property-casualty insurance trade groups Insurer organizations said enactment of the flex-rating legislation will create a more competitive insurance market, giving consumers greater access to more products at lower prices.

Connecticut's Assembly passed the measure, Senate Bill 410, on a 144-1 vote. It also includes provisions on uninsured/underinsured motorist coverage relating to requirements insurers may impose for such coverage to be accessed.

Until the new law becomes effective, all rates and rating plans must be filed and approved before going into effect.

According to Kristina Baldwin, a representative of the Property Casualty Insurers Association of America, auto premiums on average are 10 percent lower in states with flex rating or open competition than in states which require prior approval of rates.

The flex measure that was approved was a compromise. Insurers had sought a 12 point flex band, and the legislature at one point had set the percentage at 4 percent.