"An Act relating to policy forms and rates that require filing; requiring the filing of certain rates, rating schedules, loss cost adjustments, and rating plans with the director of the division of insurance; establishing a procedure for the director of the division of insurance to obtain additional supporting information from an insurer for a filing; relating to an application for a rate other than that in an applicable rate filing; requiring prior approval for certain rating systems and the procedure for approving a filing; providing for the issuance of orders relating to nonconforming filings after a hearing; relating to the regulation of joint underwriting and joint reinsurance; relating to flex rating; relating to file and use, filing of rates, supplementary rate information, and supporting information; authorizing the director of the division of insurance to require prior approval; relating to form filing subject to prior approval and form filing subject to file and use; and providing for penalties relating to file and use. "
Under existing law property/casualty insurance rates and forms are subject to the insurance commissioner's prior approval before they may be put in place. While maintaining the insurance commissioner's authority to oversee rate changes, a key component of the bill is its creation of a percentage "flex band." HB 216 allows an insurer to make rate increases and decreases within the flex band without having to first obtain the insurance commissioner's prior approval. Rate changes outside of the flex band must be filed with the insurance commissioner for her review before the rates are put into effect. For forms, HB 216 gives the insurance company a choice. The insurer may seek the commissioner's prior approval, or the insurer may file the form with the commissioner for a period of time before the form is used.
HB 216 has three basic purposes. First, the bill will create an environment where insurers compete more vigorously on rates and products offered to consumers. Second, HB 216 will encourage insurers who are in the Alaska market to stay here and will attract new insurers to Alaska. This will result in more competition, which will give consumers more choices and more competitive prices. Third, HB 216 is in line with the national movement away from strict government price controls toward a more flexible, more competitively oriented system for the regulation of insurance rates and forms.
HB 216 is the result of discussions among insurance companies, agents and the Director of Insurance and her staff. The discussions started last July and have been ongoing over the past nine months. The participants in this effort used the flex-rating model law adopted by the National Conference of Insurance Legislators (NCOIL) as a starting point. Some elements of the NCOIL model were adopted - others were discarded. However, HB 216 is consistent with the NCOIL model's goal of modernizing state insurance regulation. We believe that HB 216 will create a more dynamic; more competitively oriented insurance market in Alaska. The competition on rates and forms that HB 216 will encourage will benefit Alaska insurance consumers.