One southern state going for it
Mississippi is trying something that Florida wanted to try 15 years ago but didn’t – a flexible rating system for property and casualty insurance companies. The state’s Department of Insurance says its purpose is “to implement a more efficient, reasonable and competitive property and casualty insurance market and regulatory environment that benefits Mississippi consumers.”
Under the proposed regulation, companies would have leeway to raise or lower rates by 15% without making a rate filing. It would apply to all commercial P&C lines which are not otherwise exempt from rate filing and approval requirements as set forth in House Bill 773, which passed in the 2020 session of the Mississippi Legislature. The Flexible Rating System would also apply to stand-alone residential earthquake policies and stand-alone residential flood insurance policies that are not written through the National Flood Insurance Program. The regulation would not apply to workers’ compensation and medical malpractice insurance, nor any assigned risk/residual market plans or the Mississippi Windstorm Underwriting Association.
Insurance companies would be required to notify regulators of any change in rates implemented under the flex plan. The proposal requires the Insurance Commissioner to disapprove any change he/she determines is excessive, inadequate or unfairly discriminatory, per already established procedure. The department is accepting written comments on this regulation through November 13.
Personally, I love the concept. The insurance industry proposed flex rates here in Florida in 2005 with a 5% rate band but couldn’t get it approved. My belief and prediction: competition will keep the market in check.
LMA Newsletter of 10-26-20