NU Online News Service, April 8, 12:19 p.m. EDT
Tennessee has joined a growing number of states in passing flex-rating legislation.
With overwhelming support from the state Senate and House, SB 777 will allow insurers to immediately use periodic rate changes on a file-and-use basis, without waiting for regulatory approvals, so long as the rate falls within a 15 percent "flex band"—an increase or decrease by more than 15 percent.
Twenty-two other states have implemented a form of this rate modernization, says the National Association of Mutual Insurance Companies (NAMIC).
The industry expects Gov. Bill Haslam to sign the bill into law. When enacted it will increase efficiency and serve customers better, says Erin Collins, NAMIC's Mid-Atlantic state affairs manager.
"Because of that efficiency, regulators can focus their limited resources on filings outside of the band and ensure their high level of consumer protection," she adds.
Regulators will still be able to make sure the rates applied are adequate and not discriminatory, says the American Insurance Association (AIA).
The measure will "facilitate more accurate pricing for policyholders," says Ray Farmer, AIA Southeast region vice president. "This bill will promote a more vibrant personal lines market in Tennessee."
Meanwhile in Florida, legislators are also mulling a flex-rating bill, SB 1330. The measure, which has passed the Senate Banking and Insurance Committee, would allow some insurers to increase rates for personal and commercial residential property up to 15 percent statewide, or up to 30 percent on an individual policy basis.
According to Highline Data, the top writers of homeowners multiperil insurance in Tennessee in 2010 were State Farm (27.1 percent market share), Tennessee Farmers Mutual (19.2 percent), Allstate (9.9 percent), Travelers (6.2 percent) and Liberty Mutual (5.1 percent).
Highline Data is a part of Summit Business Media, which also own National Underwriter.
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