NAMIC–backed Rate Reform Legislation Signed by Kansas Governor

Rate modernization legislation advocated by NAMIC was signed into law on May 13 by Gov. Kathleen Sebelius. The legislation, HB 2689, includes the Flex Rating Regulatory Improvement Model Act, property/casualty rate modernization legislation originally introduced as SB 560 and sponsored by Sen. Ruth Teichman and Rep. Clark Shultz.

The bill is based on the National Conference of Insurance Legislators’ Flex-Rating Model Act and will create a flex-rating system allowing property/casualty insurers to increase or decrease rates up to 12 percent without regulatory approval. The bill also preserves the insurance department’s authority to stop a rate filing if it is deemed inadequate or unfairly discriminatory.

The original bill unanimously passed the Senate in February, and the insurance department dropped its opposition to the bill once the proposal was approved by the Senate committee. The department ultimately testified as a proponent in the House stating the proposal was necessary to modernize Kansas regulation and to stave-off federal regulation.

The bill was approved by the House Insurance Committee on March 18. For reasons unrelated to the substance of the bill, SB 560 was negatively amended on the House floor, forcing bill proponents to abandon the original bill in favor of inserting the flex-rating language into HB 2689. To ensure passage, Rep. Shultz and legislative leadership decided to hold-off on a “concurrence” vote on HB 2689 until the Veto Session. NAMIC and other industry advocates worked with the bill’s sponsors to build support for the bill resulting in a 29-seat margin of victory on the House floor.

NAMIC led-off testimony in both the Senate and House emphasizing that SB 560/HB2689 is the by-product of a unanimous recommendation made last year by Kansas Insurance Department Fee Modernization and Rating Laws Task Force. NAMIC met with legislators and authored talking points and other materials used by other advocates in meetings with legislators. The task force was established to study personal lines regulatory modernization and other topics. NAMIC was member of the task force and made the motion to adopt the NCOIL model.

The model was overwhelmingly adopted by NCOIL in 2003 and is viewed as an interim step toward rate regulation based on an open-competition system. With the governor’s signature, Kansas becomes the ninth state to adopt a flex-rating law.

Questions may be directed to NAMIC State Affairs Director Joe Thesing.

Posted: Tuesday, May 20, 2008 12:00:00 AM. Modified: Tuesday, May 20, 2008 2:48:20 PM.

(317) 875-5250 - Indianapolis | (202) 628-1558 - Washington, D.C.

Contact NAMIC | Press | Advertise | Sponsor

We are 1,400 property/casualty insurance companies serving more than 135 million auto, home and business policyholders, with more than $196 billion in premiums accounting for 50 percent of the automobile/homeowners market and 31 percent of the business insurance market. We are the largest and most diverse property/casualty trade association in the country, with regional and local mutual insurance companies on main streets across America joining many of the country’s largest national insurers who also call NAMIC their home. More than 200,000 people are employed by NAMIC members.