NAIC Takes No Action On Personal Lines Deregulation

SAN ANTONIO, TEXAS--A unit of the National Association of Insurance Commissioners took no action here to move ahead with rate deregulation for personal lines.

At a meeting of the Personal Lines Regulatory Framework Working Group at NAIC's winter meeting Saturday, regulators could not agree on model regulation and legislation that would grant more rate freedom for insurers.

The regulators will continue to try and reach some sort of consensus on what rate regulation package could pass over the next few weeks.

David Snyder, American Insurance Association assistant vice president, called the work of the panel this year a "missed opportunity."

"What began as an NAIC initiative to update personal lines rate and form regulation by injecting competition into the system has deteriorated into a rhetorical defense of the most intrusive and anticompetitive forms of regulation now being practiced in some states," Mr. Snyder said.

In 1999 following passage of the federal Gramm-Leach-Bliley Financial Modernization Act, the NAIC appeared open to exploring the issue of personal lines rate deregulation after approving a variation of it for commercial underwriters.

But following the Sept. 11, 2001 terrorist attacks and the subsequent sharp spike in rates, enthusiasm for deregulation seemed to be dampened.

Some states have introduced so-called "flex rating" systems that allow insurance rate changes within certain percentages as a sort of introduction to rate freedom.

Congress has previously put forward drafts of Optional Federal Charter legislation, which has not moved. Leaders of the incoming Congress have said they will debate the issue but have been noncommittal about action. Bills are due to be introduced early in the new session.

Meanwhile, the National Conference of Insurance Legislators has approved a model statute for personal lines rate deregulation and a flex rating measure as an alternative.