SENATE BILL REPORT

HB 1322

BYRepresentatives Lux, Chandler, Nutley, Peery and Meyers; by request of Office of Insurance Commissioner

Revising insurance form and rate filing requirements.

House Committe on Financial Institutions & Insurance

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):February 18, 1988

Majority Report:  Do pass.

      Signed by Senators von Reichbauer, Chairman; West, Vice Chairman; Johnson, Kreidler, McCaslin, Rasmussen, Sellar.

Senate Staff:Benson Porter (786-7470)

                  February 18, 1988

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE, FEBRUARY 18, 1988

BACKGROUND:

Insurance policy forms filed with the office of the Insurance Commissioner automatically become effective 15 days after receipt.  During the 15 day review period, the commissioner may approve or disapprove the submitted form or may extend the review period another 15 days by notifying the applicant.  This limited time period can create a situation where the insurance commissioner cannot review a form before it becomes effective.

A member or subscriber to a rating organization is not required to adhere to a form filed on behalf of the member or subscriber by the organization.  They are not required to file any deviations to these forms.  Law requires insurance companies to file rate deviations.

The rating basis and rates for a policy subject to audit are provided upon request by the insured or policy examining bureau. In practice, however, the insurance commissioner requires this information prior to the approval of submitted policies.

Deviations filed with the commissioner are to be given a hearing unless the hearing is waived by the applicant.  Such hearings are no longer necessary or desirable for the application process and are inconsistent with other insurance filing requirements.  Deviations must be a uniform percentage increase or decrease to be applied to the rates for all classes of both fire and allied lines, and other lines of insurance.  All deviations are to remain in effect for one year unless application is made to and approved by the commissioner.  It has been suggested that these deviation provisions do not promote competition and restrict companies from filing deviations they can support.

Casualty insurance rates, rating schedules, and deviations are to be filed with the commissioner under a separate section.  The provisions for such filings and their approval process are the same for other insurance policies and the separate casualty insurance section is considered redundant.

SUMMARY:

Forms filed with the commissioner's office are to become effective following a 30 day review period.

Members or subscribers to a rating organization are to adhere to form filings made on their behalf by such organizations. Deviations from such forms are permitted only when filed with the commissioner in accordance with this chapter.

The basis for the rating and the actual rating must be included in policies subject to audit.

Provisions requiring deviation filings' hearings and uniform percentage changes to be applied to all rates for all classes of insurance are deleted.

The section concerning casualty insurance rates and deviation filings is deleted.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: David Rodgers, Chief Deputy Insurance Commissioner (for)