Commercial Lines Rating Update: Deregulation
NAIC: At the Spring Meeting of the NAIC, the Commerical Lines (EX) Working Group of the NAIC again was charged with studying deregulation of rate and form for commercial lines. Large commercial insureds were the beneficiary of a prior study undertaken in 1998, so like locusts this issue has arisen. The new study may result in multi-state standardization of the treatment of exempt commercial policyholders.
NY: Insurers have had to organize separate subsidiaries in order to maintain separate rating plans. This has increased internal administration and expense, expanded pools, complicated mergers and divestitures, and impacted reinsurance. Section 2349 of New York’s Insurance Law permits a NY admitted insurer to have multi-tier rating plans for personal auto. The New York State Senate has been trying to do the same for commerical insurance. On April 29, 2013 the Senate almost unanimously passed S.2891 which now resides with the Insurance Committee of the Assembly. The Bill, as currently drafted, would amend Section 2352 of the Insurance Law. As with personal auto the new rating plan is subject to prior approval and applies to new customers after that approval, or to customers that were subject to a terminated rating plan. Non-renewal, conditional non-renewal, and depopulation caps are rating plan specific.
Be sure to plan any changes in an insurer’s premium volume with other regulatory constraints in mind. Deregulation offers both opportunity and pitfalls, if not thought through. As always, your thoughts and questions are most welcome.
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