HLS 10RS-1220 ORIGINAL
Page 1 of 4
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
Regular Session, 2010
HOUSE BILL NO. 460
BY REPRESENTATIVE KLECKLEY
INSURANCE/RATES: Allows for the use of flex-rating for personal lines property and
casualty insurance
AN ACT1
To amend and reenact R.S. 22:1451(C)(1), (E), and (F) and to enact R.S. 22:1451(G),2
relative to systems for ratemaking; to allow for a flex-rating system for personal lines3
property and casualty insurance; and to provide for related matters.4
Be it enacted by the Legislature of Louisiana:5
Section 1. R.S. 22:1451(C)(1), (E), and (F) are hereby amended and reenacted and6
R.S. 22:1451(G) is hereby enacted to read as follows: 7
ยง1451. Systems for ratemaking8
* * *9
C.(1) Subject to the exception exceptions specified in Subsection10
Subsections D and E of this Section, each filing submitted to the commissioner shall11
be on file for a waiting period of forty-five days before it becomes effective. Upon12
written application by such insurer or rating organization, the commissioner may13
authorize a filing which he has reviewed to become effective before the expiration14
of the waiting period. A filing shall be deemed to meet the requirements of this15
Subpart unless disapproved in writing by the commissioner within the forty-five-day16
waiting period. The commissioner may by rule, regulation, or order reduce or17
eliminate the waiting period specified in this Subsection. For any filing that is18
disapproved, the insurer may appeal such disapproval to the Nineteenth Judicial19
District Court within fifteen days from the receipt of written notice of disapproval.20
* * *21 HLS 10RS-1220 ORIGINAL
HB NO. 460
Page 2 of 4
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
E.(1) Short title. This Subsection shall be known and may be cited as "The1
Property/Casualty Flex-Rating Regulatory Improvement Model Act".2
(2) Notwithstanding the requirements of Subsection C of this Section, a3
filing made by an insurer under this Section that provides for an overall statewide4
rate increase or decrease of no more than twelve percent in the aggregate for all5
coverages that are subject to the filing may take effect on the date it is filed. The6
twelve percent shall not apply on an individual insured basis. No more than one rate7
filing may be made by an insurer pursuant to the expedited process provided for in8
this Subsection during any twelve-month period, unless a rate filing, when combined9
with any other rate filing or filings made by an insurer within the preceding twelve10
months does not result in an overall statewide increase or decrease of more than11
twelve percent in the aggregate for all coverages that are subject to the filing.12
(3) Rate filings falling outside of the limitation provided for in this13
Subsection shall be subject to Subsection C of this Section, unless those filings are14
otherwise exempt from those provisions pursuant to another Section of this Title.15
(4) A filing submitted pursuant to this Subsection is presumed to comply16
with state law. If, however, the commissioner determines that the filing is17
inadequate or unfairly discriminatory, he shall issue a written order specifying in18
detail the provisions of this Title that the insurer has violated and the reason the19
filing is inadequate or unfairly discriminatory and stating a reasonable future date on20
which the filing is to be considered no longer effective. An order by the21
commissioner pursuant to this Subsection is prospective only and shall not affect any22
contract issued or made before the effective date of the order. For purposes of this23
Subsection, "unfairly discriminatory" means a rate for a risk that is classified in24
whole or in part on the basis of race, color, creed, or national origin.25
(5) No rate increase within the limitation specified in this Subsection may26
be implemented with regard to an individual existing policy unless the increase is27
applied at the time of a renewal or conditional renewal of an existing policy and the28
insurer, at least thirty days in advance of the end of the insured's policy period, mails29 HLS 10RS-1220 ORIGINAL
HB NO. 460
Page 3 of 4
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
or delivers to the named insured, at the address shown in the policy, a written notice1
that clearly and conspicuously discloses its intention to change the rate. A notice of2
renewal or conditional renewal that clearly and conspicuously discloses the renewal3
premium applicable to the policy shall be deemed to be in compliance with this4
Subsection.5
(6) Scope. This Subsection shall apply to personal lines insurance written6
on property and casualty risks in this state by an insurer authorized to do business in7
this state.8
E. F. All provisions of this Section shall be applicable when a competitive9
market in property and casualty lines insurance exists. The commissioner may10
determine if there exists a competitive or noncompetitive market pursuant to the11
provisions of R.S. 22:1453, including requiring reasonable notice and a public12
hearing prior to determining a market to be noncompetitive. If, after a public13
hearing, the commissioner determines the market to be noncompetitive, all rate14
filings shall follow the provisions of Subsection C of this Section without regard to15
the exception specified in Subsection D of this Section. An aggrieved party affected16
by the commissioner's decision, act, or order may demand a hearing in accordance17
with Chapter 12 of this Title, R.S. 22:2191 et seq.18
F. G. No provision of this Section shall prohibit the commissioner from19
conducting market conduct exams to ensure the rates being charged by insurers are20
not inadequate, excessive, or unfairly discriminatory.21
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Kleckley HB No. 460
Abstract: Provides for a flex-rating system for personal lines written on property and
casualty risks in this state by an insurer authorized to do business in this state.
Present law provides that, for all lines of insurance, except as otherwise provided by present
law, each application for a rate change is to be on file with the commissioner of insurance,
and unless disapproved in writing within that 45 days, the application is deemed approved. HLS 10RS-1220 ORIGINAL
HB NO. 460
Page 4 of 4
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
Also allows the commissioner to reduce or eliminate this waiting period by rule, regulation,
or order.
Present law otherwise provides that insurers negotiating with and insuring commercial
entities, except with regard to workers' compensation and medical malpractice insurance,
with not less than $10,000 in annual premiums are required to file insurance rates with the
commissioner for informational purposes only. Also allows the commissioner to reduce or
eliminate the annual premium threshold by rule, regulation, or order.
Present law provides that it shall apply when a competitive market in property and casualty
lines exists. Provides that a competitive market for a line of insurance is presumed to exist
unless the commissioner, after notice and hearing, rules that a reasonable degree of
competition does not exist.
Proposed law provides that it shall be known and may be cited as "The Property/Casualty
Flex-Rating Regulatory Improvement Model Act".
Proposed law provides that, notwithstanding the requirements of present law, a filing made
by an insurer that provides for an overall statewide rate increase or decrease of no more than
12% in the aggregate for all coverages that are subject to the filing may take effect on the
date it is filed. Specifies that the 12% shall not apply on an individual insured basis. Further
limits any such rate filing to not more than once during any 12-month period, unless a rate
filing, when combined with any other rate filing or filings made by an insurer within the
preceding 12 months does not result in an overall statewide increase or decrease of more
than 12% in the aggregate for all coverages that are subject to the filing. Specifies that rate
filings falling outside of the limitation provided for in proposed law shall be subject to
present law relative to rate filing, unless those filings are otherwise exempt from such law
pursuant to another provision of present law, the Insurance Code.
Proposed law provides that a filing submitted pursuant to proposed law is presumed to
comply with state law. Further provides, however, that if the commissioner determines that
the filing is inadequate or unfairly discriminatory, he shall issue a written order specifying
in detail the provisions of present law, the Insurance Code, that the insurer has violated and
the reason the filing is inadequate or unfairly discriminatory and stating a reasonable future
date on which the filing is to be considered no longer effective. Specifies that such an order
is prospective only and shall not affect any contract issued or made before the effective date
of the order. Defines "unfairly discriminatory" as a rate for a risk that is classified in whole
or in part on the basis of race, color, creed, or national origin.
Proposed law additionally provides that no rate increase within the limitation specified in
proposed law may be implemented with regard to an individual existing policy unless the
increase is applied at the time of a renewal or conditional renewal of an existing policy and
the insurer, at least 30 days in advance of the end of the insured's policy period, mails or
delivers to the named insured, at the address shown in the policy, a written notice that clearly
and conspicuously discloses its intention to change the rate. Provides that such a notice shall
be deemed to be in compliance with proposed law.
Proposed law provides that it shall apply to personal lines insurance written on property and
casualty risks in this state by an insurer authorized to do business in this state.
(Amends R.S. 22:1451(C)(1), (E), and (F); Adds R.S. 22:1451(G))