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H0380........................................................by WAYS AND MEANS
PROPERTY INSURANCE - RATES - Adds to and amends existing law to provide that
every insurer regulated pursuant to Chapter 14, Title 41, Idaho Code, shall
file a complete rate application with the director when the insurer desires to
change rates; to provide for public notification; to provide for public
hearings; to provide procedures; to provide notice; to provide for judicial
review; to revise standards for the setting of rates; and to provide that, in
setting rates, no consideration shall be given to the degree of competition
and the director shall not consider whether the rate mathematically reflects
the insurance company's investment income.
03/20 House intro - 1st rdg - to printing
03/21 Rpt prt - to Bus
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-seventh Legislature First Regular Session - 2003
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 380
BY WAYS AND MEANS COMMITTEE
1 AN ACT
2 RELATING TO PROPERTY INSURANCE; AMENDING CHAPTER 14, TITLE 41, IDAHO CODE, BY
3 THE ADDITION OF A NEW SECTION 41-1404, IDAHO CODE, TO PROVIDE THAT EVERY
4 INSURER REGULATED PURSUANT TO CHAPTER 14, TITLE 41, IDAHO CODE, SHALL FILE
5 A COMPLETE RATE APPLICATION WITH THE DIRECTOR WHEN THE INSURER DESIRES TO
6 CHANGE RATES, TO PROVIDE FOR PUBLIC NOTIFICATION, TO PROVIDE FOR PUBLIC
7 HEARINGS, TO PROVIDE PROCEDURES, TO PROVIDE NOTICE AND TO PROVIDE FOR
8 JUDICIAL REVIEW; AND AMENDING SECTION 41-1405, IDAHO CODE, TO REVISE STAN-
9 DARDS FOR THE SETTING OF RATES AND TO PROVIDE THAT IN SETTING RATES NO
10 CONSIDERATION SHALL BE GIVEN TO THE DEGREE OF COMPETITION AND THE DIRECTOR
11 SHALL CONSIDER WHETHER THE RATE MATHEMATICALLY REFLECTS THE INSURANCE
12 COMPANY'S INVESTMENT INCOME.
13 Be It Enacted by the Legislature of the State of Idaho:
14 SECTION 1. That Chapter 14, Title 41, Idaho Code, be, and the same is
15 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
16 ignated as Section 41-1404, Idaho Code, and to read as follows:
17 41-1404. APPROVAL OF INSURANCE RATES. (1) Every insurer that desires to
18 change any rate pursuant to this chapter shall file a complete rate applica-
19 tion with the director. A complete rate application shall include all data
20 required by this title and such other information that the director shall
21 require. The applicant shall have the burden of proof of proving that the
22 requested rate change is justified and meets the requirements of this chapter.
23 (2) The director shall notify the public of any application by an insurer
24 for a rate change. The application shall be deemed approved sixty (60) days
25 after public notice unless: (a) a consumer or his or her representative
26 requests a hearing within forty-five (45) days of public notice and the direc-
27 tor grants the hearing, or determines not to grant the hearing and issues
28 written findings in support of that decision; or (b) the director on his or
29 her own motion determines to hold a hearing; or (c) the proposed rate adjust-
30 ment exceeds seven percent (7%) of the then applicable rate for personal lines
31 or fifteen percent (15%) for commercial lines, in which case the director
32 shall hold a hearing upon a timely request. In any event, a rate change appli-
33 cation shall be deemed approved one hundred eighty (180) days after the rate
34 application is received by the director unless that application has been dis-
35 approved by a final order of the director subsequent to a hearing or extraor-
36 dinary circumstances exist. For purposes of this section, "received" means
37 the date delivered to the department.
38 (3) For purposes of this section, extraordinary circumstances include the
39 following:
40 (a) Rate change application hearings commenced during the one hundred
41 eighty (180) day period provided by subsection (2) of this section. If a
42 hearing is commenced during the one hundred eighty (180) day period, the
43 rate change application shall be deemed approved upon expiration of the
2
1 one hundred eighty (180) day period or sixty (60) days after the close of
2 the record of the hearing, whichever is later, unless disapproved prior to
3 that date.
4 (b) Rate change applications that are not approved or disapproved within
5 the one hundred eighty (180) day period provided by subsection (2) of this
6 section as a result of a judicial proceeding directly involving the appli-
7 cation and initiated by the applicant or an intervenor. During the pen-
8 dency of the judicial proceedings, the one hundred eighty (180) day period
9 is tolled, except that in no event shall the director have less than
10 thirty (30) days after conclusion of the judicial proceedings to approve
11 or disapprove the application. Notwithstanding any other provision of
12 law, nothing shall preclude the director from disapproving an application
13 without a hearing if a stay is in effect barring the director from holding
14 a hearing within the one hundred eighty (180) day period.
15 (4) The director shall adopt rules governing hearings required by subsec-
16 tion (2) of this section. These rules shall, at a minimum, include timelines
17 for scheduling and commencing hearings, and procedures to prevent delays in
18 commencing or continuing hearings without good cause.
19 (5) Public notice required by this section shall be made through distri-
20 bution to the news media and to any member of the public who requests place-
21 ment on a mailing list for that purpose. The director shall place all public
22 notices on the department's website.
23 (6) All hearings conducted pursuant to this section shall be in confor-
24 mance with chapter 52, title 67, Idaho Code, and any judicial review of a
25 decision of the director shall be pursuant to chapter 52, title 67, Idaho
26 Code, and this title.
27 SECTION 2. That Section 41-1405, Idaho Code, be, and the same is hereby
28 amended to read as follows:
29 41-1405. RATE STANDARDS. (1) Rates shall not be excessive, inadequate or
30 unfairly discriminatory or otherwise in violation of this chapter. All rates
31 set by the director shall be in compliance with this chapter. In determining
32 whether a rate is excessive, inadequate or unfairly discriminatory, no consid-
33 eration shall be given to the degree of competition and the director shall
34 consider whether the rate mathematically reflects the insurance company's
35 investment income.
36 (2) No rate shall be held to be excessive unless the director finds that:
37 (a) Such rate is unreasonably high for the insurance provided, and
38 (b) A reasonable degree of competition does not exist in Idaho with
39 respect to the classification to which the rate is applicable.
40 (3) No rate shall be held to be inadequate unless the director finds
41 that:
42 (a) Such rate is unreasonably low for the insurance provided and the con-
43 tinued use of such rate endangers the solvency of the insurer using the
44 same, or
45 (b) Such rate is unreasonably low for the insurance provided and the use
46 of such rate by the insurer using the same has, or if continued will have,
47 the effect of destroying competition or creating a monopoly.
48 (4) Neither of such findings shall be made by the director except after a
49 hearing on reasonable notice.
50 (5) Nothing contained in this chapter shall be construed to repeal or
51 modify the provisions of chapter 13, title 41 (trade practices and frauds),
52 Idaho Code, and any rate, rating classification, rating plan or schedule, or
53 variation thereof, established in violation of any of such provisions shall,
3
1 in addition to the consequences stated in such chapter or elsewhere, be deemed
2 a violation of this section.
STATEMENT OF PURPOSE
RS 13044
The purpose of this legislation is to provide that the Director
of the Department of Insurance is to receive, review and approve
insurance company rate increase requests. The Director of the
Department of Insurance shall notify the public of any
application for an insurance rate increase.
FISCAL IMPACT
There is no impact to the General Fund. A cost of $200,000 from
dedicated funds will provide for two Insurance Analyst Seniors
and two Office Specialists.
Contact
Name: Rep. Mike Mitchell
(208) 332-1000
Rep. David Bieter
(208) 332-1000
STATEMENT OF PURPOSE/FISCAL NOTE H 380