Alabama Senate Bill SB203

Alabama 2025 Regular Session

• Introduced: 2/27/25
• Refer: 2/27/25

Caption

Dental insurance; set medical loss ratio for insurers

Impact

The bill seeks to amend existing Alabama laws relating to dental insurance. By instituting a minimum medical loss ratio, SB203 aims to ensure that consumers receive a fair return on their premiums and that their coverage translates into actionable care rather than being disproportionately spent on administration. The requirement for refunds in case of noncompliance is positioned as a safeguard for policyholders, aiming to hold insurers accountable for their spending practices and to foster a competitive insurance marketplace that prioritizes consumer welfare.

Summary

SB203 aims to establish regulations for dental insurers in Alabama, mandating a medical loss ratio of at least 85 percent. This means that insurers must allocate a minimum of 85 percent of the premiums collected to pay for claims related to dental care. Insurers who fall short of this requirement will be obliged to refund the excess premiums to their policyholders. The proposed bill seeks to enhance transparency and consumer protection within the dental insurance industry by requiring annual reporting of financial information, including income and claims expenses, to the Commissioner of Insurance and making this information public.

Contention

Despite its consumer-oriented provisions, SB203 may face opposition from some stakeholders in the insurance industry who could argue that the enforcement of a strict medical loss ratio may lead to increased operational costs and potentially higher premiums. There is a concern that imposing such regulations might deter new insurers from entering the market, thereby reducing competition and consumer choice in the long run. The balance between consumer protections and maintaining a competitive and viable insurance landscape will likely be a point of contention as the bill progresses through the legislative process.