N.Y. Prepares Final Regulations for Flex Rating on Auto Policies

New York State issued proposed regulations for the re-implementation of flex rating for automobile insurance in a move toward final implementation of a 2008 law.

A law signed by Gov. David A. Paterson last year restored flex rating, which existed in the state from the mid-1990s through 2001. The law allowed insurers to increase or decrease premiums by up to 5% annually without prior regulatory approval (BestWire, June 29, 2008). Rates would still be filed with the superintendent of insurance and could be rejected if deemed unjustified.

With the law scheduled to go into effect on Jan. 1, 2009. the New York State Insurance Department twice implemented emergency regulations to keep the provisions in place until final regulations could be adopted. The current draft regulations will enter a 45-day comment period, department spokesman Andy Mais said.

Paul Magaril, regional manager and counsel for the Property Casualty Insurers Association of America, said he will speak with members to gauge their view of the current regulations. PCI and other industry representatives strongly endorsed the return of flex rating to New York.

Magaril previously cited the flex rating reform as a highlight of former Insurance Superintendent Eric Dinallo's tenure (BestWire, May 29, 2009).

The top five writers of private passenger automobile insurance in New York in 2008, according to A.M. Best Co. state/line data based on direct premiums written, were: Berkshire Hathaway Insurance Group, with a 23.0% market share; Allstate Insurance Group, with 18.9%; State Farm Group, with 10.8%; Progressive Insurance Group, with 6.6%; and Liberty Mutual Insurance Cos., with 5.7%.