MURIELBOWSER MAYOR February23,2023 TheHonorablePhilMendelson,Chairman CounciloftheDistrictofColumbia JohnA.WilsonBuilding 1350PennsylvaniaAvenue,NW,Suite504 Washington,DC20004 DearChairmanMendelson: EnclosedforconsiderationandenactmentbytheCounciloftheDistrictofColumbiaarethe“Motor VehicleandHomeownerInsurancePriorApprovalRateFilingEmergencyAmendmentActof2023,” the“MotorVehicleandHomeownerInsurancePriorApprovalRateFilingTemporaryAmendmentAct of2023,”andthe“MotorVehicleandHomeownerInsurancePriorApprovalRateFilingAmendment Actof2023,”alongwithanaccompanyingemergencydeclarationresolution.Thepurposeofthe legislationistochangethemotorvehicleandhomeownerinsuranceratefilingstandardfromfileand usetopriorapproval. TheDepartmentofInsurance,Securities,andBanking(“Department”)hasnoticedatrendinmotor vehicleandhomeownerinsurancemarketsintheDistrictwhereinsurershavebeenrequestingdouble- digitrateincreases.Insomecases,theincreasesareinexcessof20percent.Whileinsurersareentitled toanadequatepremiumrateinexchangefortheinsurancecoveragetheyprovide,theCommissioner isconcernedabouttheimpactoftheserateincreasesonDistrictresidents. Inaddition,becausetheratefilingsofmotorvehicleandhomeownerinsurersoperateunderafileand usestandardintheDistrict,insurerscurrentlycanimplementtherateincreasesimmediatelyuponfiling therateswiththeCommissioner.TheCommissionerisconcernedthatthelargepremiumincreases couldcausepolicyholderstomisspaymentsduetotheirinabilitytoaffordtheincreasedrateswhileat thesametimelackingsufficienttimetoshopformoreaffordableinsurance.Suchaninstancecould resultinpolicieslapsingduetonon-paymentandanincreaseinuninsuredmotorists.Byenactingthe legislationandchangingtheratefilingstandardformotorvehicleandhomeownerinsurerratefilings fromfileandusetopriorapprovalwitha90daydeemer,theDepartmentwillhavetimetoreviewthe filingstoensurethattherateincreasesareneitherexcessivenordiscriminatorybeforethenewrates becomeeffective.Moreover,thelegislationwillrequiremotorvehicleandhomeownerinsurersto providepolicyholders60daysadvancewrittennoticeforanyrateincreaseof10%ormore. ‘Accordingly,IurgetheCounciltotakepromptandfavorableactionontheenclosedlegislation. Sincerely, far ser Socamridsuaone i 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 ChairmanPhilMendelson attherequestoftheMayor APROPOSEDRESOLUTION INTHECOUNCILOFTHEDISTRICTOFCOLUMBIA. Todeclaretheexistenceofanemergencywithrespecttotheneedtoamend,onanemergency basis,AnActtoprovideforregulationofcertaininsuranceratesintheDistrictof Columbia,andforotherpurposes,tochangethemotorvehicleandhomeownerinsurance ratefilingstandardfromfileandusetopriorapprovalwitha90-daydeemer,torequire noticeandopportunityforahearingbeforearatefilingisdeterminedtobeexcessiveor unfairlydiscriminatory,andtorequireinsurerstoprovidepolicyholders60dayadvance writtennoticeofanyrateincreaseof10%ormore. RESOLVED BYTHECOUNCILOFTHEDISTRICTOFCOLUMBIA, Thatthis resolutionmaybecitedasthe“MotorVehicleandHomeownerInsurancePriorApprovalRate FilingAmendmentEmergencyDeclarationResolutionof2023” Sec.2.(a)TheDepartmentofInsurance,Securities,andBanking(“Department”)has noticedarecenttrendinmotorvehicleandhomeownerinsurancemarketsintheDistrictwhere insurershavebeenrequestingdouble-digitrateincreases.Insomecases,theincreasesarein excessof20%. (b)Whileinsurersareentitledtoanadequatepremiumrateinexchangeforthe insurancecoveragetheyprovide,theCommissionerisconcernedabouttheimpactoftheserate increasesonpolicyholders.Inaddition,becausetheratefilingsofmotorvehicleandhomeowner insurerscurrentlyoperateunderafileandusestandardintheDistrict,whichmeansthatthe insurersmayimplementtheirrateincreasesimmediatelyuponfilingtheirrateswiththe 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 Commissioner,theDepartmentisoftenunabletoreviewtheratefilingsandconsultwiththe insurerstosubstantiatetherateincreasesbeforetherateincreasestakeeffect. (c)Inaddition,theCommissionerisconcernedthatthelargepremiumincreases couldcausepolicyholderstomisspaymentsduetotheirinabilitytoaffordtheincreasedrates, whileatthesametimelackingsufficienttimetoshopformoreaffordableinsurance.Suchan instancecouldresultinpolicieslapsingduetonon-paymentandanincreaseinuninsured motoristsandhomeowners. (d)Bychangingtheratefilingstandardformotorvehicleandhomeownerinsurer ratefilingsfromfileandusetopriorapproval,theDepartmentwillhavetimetoreviewthe filingsandensurethattherateincreasesareneitherexcessivenordiscriminatorybeforethenew ratesbecomeeffective.Further,byrequiringinsurerstoprovide60daysadvancewrittennotice ofanyrateincreaseof10%ormore,policyholderswillhavemoretimetoconsideralternative insuranceoptions. Sec.3.TheCouncildeterminesthatthecircumstancesenumeratedinsection2constitute emergencycircumstancesmakingitnecessarythattheMotorVehicleandHomeownerInsurance PriorApprovalRateFilingAmendmentEmergencyActof2022beadoptedafterasingle reading. Sec.4.Thisresolutionshalltakeeffectimmediately. GOVERNMENT OFTHEDISTRICTOFCOLUMBIA OfficeoftheAttorneyGeneral xk na Ea LegalCounsetDivision ORANDUM TO: BeverlyL.Perry SeniorAdvisor OfficeoftheSeniorAdvisor FROM:MeganD.Browder DeputyAttorneyGeneral LegalCounselDiv DATE:November8,2022 RE: LegalSufficiencyCertificationofDraftLegislation,the“MotorVehicleand HomeownerInsurancePriorApprovalFilingAmendmentActof2022,”Emergency VersionandResolution,andTransmittalLetter (AE-22-166) ThisistoCertifythatthisomticenasreviewedtheabove-referenceddraft legislationandfoundittobelegallysufficient.Ifyouhaveanyquestions,pleasedonothesitateto callmeat(202)724-5524, Megoint MeganD.Browder GovernmentoftheDistrictofColumbia OfficeoftheChiefFinancialOfficer akk EE Cae GlenLee ChiefFinancialOfficer MEMORANDUM TO: TheHonorablePhilMendelson Chairman,CounciloftheDistrictoro bia FROM: GlenLee LHMe ChiefFinancialOffi DATI November7,2022 SUBJECT: FiscalImpactStatement-MotorVehicleandHomeownerInsurance PriorApprovalRateFilingEmergencyAmendmentActof2022 REFERENCE: DraftBillasprovidedtotheOfficeofRevenueAnalysisonOctober27, 2022 Conclusion Fundsaresufficientinthefiscalyear2023throughfiscalyear2026budgetandfinancialplanto implementthebill. Background TheDepartmentofInsurance,SecuritiesandBanking(DISB)approvesrateadjustmentsfrom insurerstoensuretheyareadequate,notexcessive,andnotunfairlydiscriminatory.Formotor vehicleinsurance,DISBallowsaninsurertofiletheirnewratesandthenbeginchargingthoserates priortoDISBapproval. ‘Thebillchangesthestandardandappliesittohomeownerinsurersaswell.Bothmotorvehicleand homeownerinsurancecompanieswillneedtofilenewratesandwaitupto60daysforDISBto approveordenytherates.IfDISBdoesnotdecideontherateswithinthattime,thentheratesare deemedtobeapproved.AninsurercanappealaDISBdecisionthatratesareexcessiveor discriminatorywithin60daysofthedecision. "AnActtoprovideforregulationofcertaininsuranceratesintheDistrictofColumbia,andforother purposes,approvedMay20,1968(62Stat.242;D.C.OfficialCode§31-2703(f)(2)). 1350PennsylvaniaAvenue,NW,Suite203,Washington,DC20004(202)727-2476 www.cto.degov ‘TheHonorablePhilMendelson FIS:“MotorVehicleandHomeownerInsurancePriorApprovalRateFilingEmergencyAmendmentActof 2022,”DraftBillasprovidedtotheOfficeofRevenueAnalysisonOctober27,2022 FinancialPlanImpact Fundsaresufficientinthefiscalyear2023throughfiscalyear2026budgetandfinancialplanto implementthebill.DISBcurrentlyholdshearingsforadverserulingsandcanabsorbanycosts associatedwithholdingthesehearingspriortoauthorizinganinsurertoimposenewrates. Page2of2