Posted: 1/7/2009

Colorado Insurers Please Contact Department of Regulatory Agencies to Express Your Concerns With the Proposed 'De Facto' Prior Approval of Rates Regulation

The Department of Regulatory Agencies held a public hearing Jan. 5 on its Proposed Amended Regulation 5-1-10, Rate and Rule Filing Submission Requirements for Property and Casualty Insurance. Written comments from the industry are due on Jan. 8 by the close of business, Mountain Standard Time. Please email your comments to Christine Gonzales-Ferrer.

The Proposed Amended Regulation 5-1-10 would:

• Require property/casualty insurers to “submit a rate filing on at least an annual basis to support the continued use of trend and other rating factors.”
• Require carriers to submit rate filings that “contain detailed support demonstrating that the assumptions continue to be appropriate, and that the rates are not excessive, inadequate or unfairly discriminatory.”
• Require all rate, rule, and loss cost filings to be submitted electronically by licensed companies, rating organizations, and advisory organizations.
• Require that the “anticipated loss ratio shall be submitted on all rate and loss cost filings, with all the necessary support to show how the loss ratio was developed.”
• Require insurers to provide “detailed support for any proposed profit load in excess of 7% after taxes for private passenger automobiles and homeowners insurance.”

NAMIC submitted written comments in opposition to the proposed amendments arguing:

1. The proposed amendments to Regulation 5-1-10 exceed the regulatory authority of the Division of Insurance.
2. The DOI’s proposed changes are inconsistent with current state law on rate and form filing requirements.
3. The proposed amendments to the regulation fail to satisfy the “necessity requirement” of CRS 10-4-404, Rate Administration.
4. The DOI’s proposed changes to the current Rate and Rule Filing Submission Requirements regulation is anti-market competition and anti-insurance consumer.
5. The proposed amendments to Regulation 5-1-10 will require an unreasonable expenditure of state resources without any tangible benefits for taxpayers.
6. The proposed requirements will improperly subject property/casualty insurers (Type II Insurance) to Type I Insurance disclosure requirements and rating approval without the appropriate due process enumerated in CRS 10-4-403 (5).
7. The proposed amendments to Regulation 5-1-10 are unnecessary because the DOI already has available at its discretion the use of the market conduct examination process to secure detailed rating information from an insurer.
8. The proposed amendments to Regulation 5-1-10, create, in effect, a rebuttable-presumption that a profit load in excess of 7 percent is unreasonable and must be justified by the insurer with “detailed support.”

Please contact DORA as soon as possible to explain how your business and insurance consumers will be adversely impacted by this unnecessary and economically and administratively burdensome regulation.