Arkansas Debating Commercial Lines Deregulation
The Arkansas Legislature is considering a bill developed by an industry coalition that industry players say will significantly improve the competitive environment of the state's insurance market.
The bill, HB 1441, was sponsored by Rep. Percy Malone (D). It simplifies the regulatory approval process for rates and forms for commercial insurance products.
Under the bill, rates applicable to commercial risks, excluding workers' compensation, are exempted from filing and review requirements. Also eliminated would be the filing requirements for consent to rate forms. The forms would remain with the producing agent or broker.
"These proposed changes will definitely help to streamline the regulatory process for insureds, insurers and the regulators," said Rita Nowak, Alliance of American Insurers commercial lines policy manager.
In addition, the bill proposes eliminating the forms filing requirements for large commercial risks. A large commercial risk, according to the bill must have a total premium of $250,000 or more and at least 25 full-time employees. Also, the firm must have a full-time certified risk manager or a licensed agent or broker to procure insurance. A risk manager must have at least one of the following designations—Associate in Risk Management (ARM), Chartered Property Casualty Underwriter (CPCU) or a Certified Risk Manager (CRM.)
"HB 1441 is an excellent initial step toward the Alliance's ultimate goal of eliminating rate and form filing requirements for products purchased by sophisticated commercial consumers," Nowak said.
"Thirteen states already have introduced bills in 1999 to simplify and streamline the commercial insurance market, with more states expected to follow suit. These reform measures run the gamut from incremental advances to sweeping measures, depending on the political and regulatory climate.
"The Alliance is committed to achieving a regulatory environment that will have efficiencies for all," Nowak said. "States seeking to improve their individual economies and minimize the role of regulatory intervention in private enterprise have been willing to work with the Alliance and others to develop innovative approaches. We are happy to see that Rep. Malone and Arkansas have joined us."
A dozen other states have introduced some form of commercial lines reform this year. They are: Colorado, Indiana, Kansas, Maine, Maryland, Massachusetts, Missouri, Nebraska, New York, Oklahoma, North Dakota and Rhode Island.