An article in the Business section on Jan. 7 mischaracterized recent auto insurance rate increases for State Farm Insurance policyholders. The company raised auto insurance rates last year by as much as 44 percent in some parts of the state.
The Sun regrets the error.
Insurance industry advocates told state regulators yesterday that proposed regulations for companies filing home and auto insurance rate increases of 15 percent or more could raise costs and lead to higher premiums for policyholders.
FOR THE RECORD - CORRECTION
At a Maryland Insurance Administration hearing, the lobbyists said the proposed regulations would unfairly punish the entire insurance industry for some sharp home and auto insurance premium increases announced last summer by a few companies.
"If a couple of companies had not filed huge rate increases in recent months, we wouldn't be here today discussing additional regulations," said Don Preston, a spokesman for the Alliance of American Insurers in Washington. "If we have over-regulation, it's going to drive our costs up, which is going to eventually trickle down to consumers."
Bill Myers, president of the Frederick Mutual Insurance Co. in Frederick, said: "I understand that the commissioner is trying to balance the concerns of consumers and the marketplace, but it appears we may be trying to fix something that's not really broken."
State Insurance Commissioner Dwight K. Bartlett III proposed the new regulations as a response to criticism of the state's relatively laissez-faire system of insurance regulation, known as "competitive rating." It allows companies to raise auto and home insurance rates without prior state hearings or approval -- except in rare instances where the increases are deemed "unreasonably high."
Under the regulations proposed by Bartlett, auto and home insurance rate increases of 15 percent or more may be subject to public hearings. Smaller rate increases would still be possible without state hearings or approvals.
The new regulations also would require an actuarial opinion on all rate changes proposed by any companies that don't have actuaries on staff -- which industry experts say would drive up costs for many smaller companies.
Industry lobbyists said yesterday that it was unclear if the new regulations would mean that hearings would be held only if companies' statewide average rate increases were at least 15 percent or if the rule would apply to increases of 15 percent in just one part of the state.
Bartlett yesterday would not answer their questions on this and other aspects of the new regulations, saying: "I am not here to testify. You are. I am dedicated to getting this [insurance regulations] right."
The state's "competitive rating" system went into effect in 1995, and was followed by sharp premium increases from some companies without state hearings.
Allstate Insurance Co. last year increased its homeowner insurance rates in some parts of the state by as much as 44 percent.
Allstate and State Farm Mutual raised their auto insurance rates in some parts of the state by as much as 70 percent.
The insurance administration will accept written comments on its proposed regulations until Jan. 21, at which time the commissioner will decide to change or adopt them.
The earliest the provisions could be adopted is Feb. 3.
Insurance lobbyists said yesterday that they didn't see a need in the industry for changing the competitive-rating system.
"We're talking about placing burdensome requirements and excessive costs on companies that would eventually lead to higher rate increases for consumers," said David Snyder, an attorney for the American Insurance Association, a national trade organization of property and casualty insurance companies.
Calvin Mahaney, president of Brethren Mutual Insurance Co. in Hagerstown, added: "Any time you're adopting a new regulation like this, you're opening up a Pandora's box for more problems."
Pub Date: 1/07/97