INDIANAPOLIS (Feb. 1, 2006)—The National Association of Mutual Insurance Companies (NAMIC) and the insurance industry are working with the New Mexico Public Regulation Commission to finalize and implement proposed rate regulations that would convert the commercial lines of insurance to a “file and use” system.
“NAMIC supports the New Mexico Insurance Division on promoting rate modernization and market competition in the commercial insurance industry,” said Christian Rataj, NAMIC’s western regional manager.
In a "file and use" rating system, the insurer's rate filing becomes effective immediately or on a future date specified by the filer. A state insurance regulator may disapprove the rate filing change, after affording the insurer an opportunity to refute, at a hearing, the regulator's contention that the rate filing is not in compliance with state law.
“Once New Mexico formally adopts a "file and use" system, it will join the ranks of 31 other states that currently have some form of "file and use" rate regulations in place,” said Rataj.
The original draft of the proposed regulations required an insurer to submit, as part of its rate filing process, an "exhibit which displays the number of policyholders who would receive, as a result of this filing, a percentage rate change in each of the following ranges:
under -50.0 percent;
between -50.0 percent and -25.1 percent;
between -25.0 percent and -10.1 percent;
between -10.0 percent and -0.1 percent;
between +0.1 percent and +10.0 percent;
between +10.1 percent and +25.0 percent;
between +25.1 percent and +50.0 percent; and
above +50.0 percent.
“NAMIC and members of the insurance industry expressed concerns to the New Mexico Insurance Division that this requirement, along with the other “exhibit requirement provisions” of the proposed regulation, would create an onerous administrative burden for insurance carriers,” said Rataj.
“The industry’s reasoning was extremely influential in changing the Division’s position on the regulation,” said Rataj. “Specifically, carriers were concerned that the provisions would increase administrative overhead expenses, create an economically prohibitive labor intensive accounting procedure, and could have a ‘chilling effect’ on carriers' willingness and ability to facilitate market competition for the benefit of the consumer.”
NAMIC commends the New Mexico Insurance Division for eliminating the exhibit requirements and for being responsive to the business needs of the insurance industry. NAMIC will continue to work with the industry and the state of New Mexico to finalize and implement "market competition" rate regulations.
For further information, contact
Rick Nelson, APR, CAE
(317) 875-5250 Tel
(317) 879-8408 Fax
Posted: Wednesday, February 01, 2006 12:00:00 AM. Modified: Wednesday, February 01, 2006 4:08:38 PM.
317.875.5250 - Indianapolis | 202.628.1558 - Washington, D.C.