PA Deregulation Bill Passes House Committee Unchanged

The Pennsylvania House Insurance Committee this week let pass without amendment SB 1077, the commercial lines deregulation bill that unanimously passed the state Senate in June.

The bill had faced an amendment that would have restricted the leeway given to insurers in pricing their commercial lines products, but the change lacked support. The full House will take up the measure in November, after the election.

"This is a tremendous vote of confidence in the bill," said Neil Malady, Alliance Mid-Atlantic regional manager. "The amendment would have prevented an insurer from increasing rates without prior approval, thereby defeating much of the purpose of the bill." As presently written, the bill allows insurers to increase or decrease small commercial lines rates in a flex band of plus or minus 10 percent, without requesting approval from the insurance department.

"This bill is an important step toward our desired goal of total commercial lines deregulation," Malady said. "The Alliance is committed to lowering insurers' costs of doing business and enacting laws that promote flexibility and creativity in product offerings. This bill advances toward this goal."

SB 1077 passed the full Senate June 2 by a 47-0 vote. It eliminates the need for companies to file rates and forms for risks generating $25,000 or more in annual premium and modifies the state's current prior approval requirements for all commercial lines filings. The bill excludes workers compensation from this requirement, but mandates that a policyholder have at least 25 employees and employ a risk manager or other qualified insurance consultant to qualify for the prior approval exemption. The insurance commissioner also would be able to publish a list of insurance products for which rates or forms needn't be filed.

In the past few years, commercial lines deregulation initiatives have passed in Kansas, Michigan, Texas and Washington. This year, Arizona enacted legislation (SB 1024 and SB 1136), while New Hampshire passed its own bill (SB 372). Deregulation of commercial rates and forms also continues to have a prominent place on the National Association of Insurance Commissioners' agenda. In September, the full NAIC adopted a white paper on the subject that encouraged states to loosen restrictions on commercial lines rate and form filings.