PA 13-167—sHB 5926

Insurance and Real Estate Committee


SUMMARY: This act extends the sunset date for the “flex rating” law for personal risk insurance (e. g. , home, auto, marine, or umbrella) from July 1, 2013 to July 1, 2015. It also adds a 15% territorial cap. This permits an insurer to “file and use” its flex rate filing to a maximum 6% statewide average change while ensuring that no individual rate territory increases by more than 15%.

EFFECTIVE DATE: Upon passage


The flex rating law permits property and casualty insurers, until the law sunsets, to file new personal risk insurance rates with the insurance commissioner and begin using them immediately without prior approval. The rate increase or decrease cannot exceed 6% statewide for all products included in the filing. The act prohibits increasing rates in any individual territory by more than 15%. The new rate cannot apply on an individual insured basis. The law does not apply to rates for the residual market.

By law, an insurer may submit more than one rate filing using the 6% flex rating band to the Insurance Department in any 12-month period if all rate filings submitted within this timeframe do not result in a statewide rate increase or decrease of more than 6% for all products included in the filing. The act similarly prohibits these filings from resulting in an aggregate increase of more than 15% in any one territory.


Under the flex rating law, an insurer can apply for a rate increase within the flex rating band only on or after a policy renewal and after notifying the insured. (The notification must specify the effective date of the increase. ) Rate filings seeking to increase or decrease rates by more than 6% statewide must receive department approval before insurers can use them.

The flex rating law deems any filings made under its provisions to be in compliance with the rating laws. If the commissioner determines rates are inadequate or unfairly discriminatory, he must order the insurer to stop using the flex rating rate change on a specified future date. The order must be in writing and explain the finding. If the commissioner issues the order more than 30 days after the insurer submitted the filing, the law requires the order to apply prospectively only and not affect any contract issued before its effective date.

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