Insurance and Real Estate Committee

JOINT FAVORABLE REPORT

Bill No.:

SB-1212

Title:

AN ACT CONCERNING COVERAGE BY THE CONNECTICUT INSURANCE GUARANTY ASSOCIATION.

Vote Date:

3/15/2007

Vote Action:

Joint Favorable Substitute

PH Date:

3/8/2007

File No.:

SPONSORS OF BILL:

Insurance & Real Estate

REASONS FOR BILL:

Section 1 would permit the Insurance Commissioner to disapprove any homeowners insurance rate that is found excessive, inadequate, or unfairly discriminatory.

Joint Favorable Substitute:

RESPONSE FROM ADMINISTRATION/AGENCY:

Susan F. Cogswell, Insurance Commissioner, appeared in support stating that given the complexity of the information that a competitive market does not exist and the lengthy administrative process required under law, Commissioner Cogswell is concerned that companies may seek excessive rate increases which the Department does not currently have the statutory authority to disapprove. This could leave homeowners, particularly those living in coastal areas, in a vulnerable situation.

NATURE AND SOURCES OF SUPPORT:

NONE

NATURE AND SOURCES OF OPPOSITION:

Insurance Association of Connecticut, testified in opposition stating the bill would increase the financial pressures on CIGA and markedly increase potential fund exposures, which ultimately are paid by the public.

American Insurance Association, opposes the bill stating that increasing the cap above $300,000 would put more financial stress on a guaranty system that is already under financial strain.

Jay Jackson, Property Casualty Insurers Association of America, appeared in opposition stating that this is a huge and dramatic step away from allowing insurers to compete in the marketplace. If you don't allow insurers to rate properly you could do tremendous damage to our existing competitive market.

Reported by: Jessica Rosario

Date: March 27,2007