Oregon 'De-Facto' Prior Approval of Insurance Rates Bill Introduced, Assigned to House Committee on Consumer Protection

HB 3046, which would establish the Insurance Rate Review Board in the Department of Consumer and Business Services and require board review and approval of all insurance rates, rating plans, and rating systems filed or used by insurers, was introduced March 11 and assigned to House Committee on Consumer Protection. The bill has yet to be scheduled for a public hearing.

NAMIC and members of the insurance industry are lobbying the House committee to kill this unnecessary and unwise legislation, so that insurance consumers don’t end up paying the cost of creating and maintaining a “Rate Approval Star Chamber” comprised of bureaucrats who have no subject matter expertise in the area of property/casualty insurance.

The bill would create the Insurance Rate Review Board, which would be comprised of five non-insurance community members appointed by the governor and who will serve at the pleasure of the governor for a four-year term. The members will be entitled to compensation and expenses as provided for in ORS 292.495.

According to Section 3 of the proposed legislation:

The Insurance Rate Review Board shall review and approve or disapprove all rates, rating plans and rating systems filed or used by an insurer or filed by a rating or advisory organization on behalf of an insurer. The insurer, rating organization or advisory organization has the burden of proving that the rates are reasonable and justified.
A filing made under subsection (1) of this section is open to public inspection immediately upon submission to the board.
Each filing shall be accompanied by the applicable fees established by the board by rule. The fees shall be based on the actual costs to the board of conducting the review process under this section.
If, within 30 days of a filing, a majority of the members of the board requests a hearing or a person makes written application to the board for a hearing on the filing, the board shall hold a hearing on any rate, rating plan or rating system reviewed by the board under subsection (1) of this section prior to approving or disapproving the rate, rating plan or rating system.

NAMIC is opposed to the proposed legislation for the following reasons:

HB 3046 would effectuate a fundamental departure from the current rate filing system in Oregon, which is working effectively to promote market competition and protect consumers from excessive or inadequate rates.
The proposed legislation is unnecessary as evidenced by the fact that Oregon has a robust insurance marketplace that is vibrant with competition, which has lead to some of the lowest property/casualty insurance rates in the nation.
HB 3046 would create a “De-Facto Prior Approval of Rates System” that will cause unnecessary delays in the approval of rate changes, discourage the introduction of new insurance products, and hinder insurers in their ability to respond to ever-changing consumer insurance needs.
The Insurance Rate Review Board approach will make the rate filing process unnecessarily contentious and costly for insurers, which could ultimately drive up insurance rates for the consumer.

When HB 3046 is set for a public hearing, NAMIC will distribute an Action Alert to encourage NAMIC members writing insurance in Oregon to contact members of the House Committee on Consumer Protection to express their concerns about the bill and to ask the committee members to VOTE "NO" on HB 3046, so as to prevent Oregon’s insurance rate making process from becoming a three-ring circus that will detrimentally impact insurance consumers.