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home / insurance / in the media

Tulsa World (Oklahoma)
Jun 06, 2004

by PAUL ENGLISH, World Capitol Bureau

Insurer bill gets a mixed reaction

Bill's author says it reduces red tape, but critic claims it strips away protections.
OKLAHOMA CITY -- The author of an 82-page bill on auto and home-owners insurance says it "stripped away some unnecessary regulation" of insurance companies, but a consumer advocate says it would "take away all protection from consumers."

The measure, House Bill 2470, was on Gov. Brad Henry's desk Friday for consideration.

Rep. David Braddock, D-Altus, said his bill was modeled after language in the National Conference of Insurance Legislators' proposed Property-Casualty Insurance Modernization Act.

The bill frees insurance companies from having to "jump through regulatory hoops" and lets competition control rates for auto and homeowner insurance, he said.

Longtime insurance industry lobbyist Angela Ables "helped put together a lot of this legislation; she worked on putting the model act into the Oklahoma legislation," Braddock said.

Almost all insurance industry lobbyists were involved in the bill, he said.

Braddock said 36 states already have adopted language from the modernization model.

"It's more oriented toward getting out in a competitive environment, more so than just trying to have a hard and fast grip around everyone, with controls," he said. "There's still controls out there, but not where you've got to jump through all these hoops, regulatory hoops."

But J. Robert Hunter, director of insurance for the Consumer Federation of America, said that " 'modernizing' is a euphemism for 'take away all protection from consumers.' "

Braddock's bill creates a "use and file" system.

Insurance companies would no longer have to file auto and homeowner insurance rate proposals with the state Property and Casualty Board before putting new rates into effect.

Within 30 days after starting the sale of policies with their new rates, the company would have to file their rates with the state insurance commissioner. The commissioner would have 30 days to review the filing.

"This 'use and file' system demonstrates that the insurance industry has been able to succeed in getting what it wants," said Douglas Heller, senior consumer advocate with the Foundation for Taxpayers and Consumer Rights. "Use and file is what insurance executives dream about when they go to bed at night.

"Essentially, the Legislature has deregulated the insurance rates by taking away the power of the insurance commissioner to block excessive and unfair insurance rates before they take effect," Heller said.

Braddock said regulation "is still there, ultimately. There are protections in place."

"If there are problems, there's no question that the insurance commissioner can approach those problems and stop things," Braddock said.

David Meuser, public information officer for State Insurance Commissioner Carroll Fisher, said his reading of Braddock's bill was that the commissioner would be powerless to do anything about excessive rates if they were found.

The bill deletes previous language in state law that allowed the commissioner to censure or suspend companies for failing to comply with a variety of rules, Fisher said.

"Basically, about anything they want to do, they're going to be able to do because we're not going to have a lot of authority," Fisher said.

"I'm not really sure what their thoughts were. These are only consumer protections. We do it to protect the policyholders."

Under current law, a company has to file its proposed new rates to the Property and Casualty Broad. The state Insurance Department reviews the filing "to make sure it makes sense" and sometimes sends it to an outside actuary, Meuser said.

If it appears the filing may have a problem getting approval from the board, maybe because of a high rate hike, the staff will talk with the company and suggest a way to amend its filing so it will get through the process as easily as possible, he said.

Currently, the board has to approve the proposed rates before the company is permitted to put them into use.

Meuser said the process normally takes four to six weeks.

Braddock, an attorney, said in promoting the bill to lawmakers he was "selling concepts."

"I'm not an insurance guy. I can't tell you everything about insurance. We do that a lot of times where we have to work on concepts. We're not experts in everything that we deal in. All I know is that the language came from the model act -- that's been enacted in 36 states."

Contact the author: Paul English (405) 528-2465 or paul.english@tulsaworld.com


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