Commercial Insurance Rate Deregulation Is All The Rage
Commercial Insurance Rate Deregulation Is All The Rage
Commercial insurance rate deregulation is all the rage; 13 states hopped on the deregulation bandwagon in 1999 alone. The American Insurance Association (AIA) predicts that more states will join in this year, relaxing state control over commercial insurance rates and forms, at least for the largest employers.
And the Insurance Research Council’s recent survey of firms with sales between $5 million and $100 million revealed that most large employers believe they could save on premiums in a deregulated insurance marketplace.
Under the current regulatory system in most states, insurance companies must obtain approval from the insurance department for any changes in policy rates. Changes to commercial coverage “forms,” that is, the actual language and format of the policy, also must be filed with the insurance commissioner.
In addition, many state insurance regulations require insurers to market new policy changes in each state where the insurer does business. According to the AIA, that’s a cumbersome process that discourages innovation in the commercial insurance market.