New Mexico passes regulatory modernization bill

The New Mexico legislature has passed a bill that would establish a file and use rate regulatory system for most personal lines of insurance. The Insurance Rate Regulation Law, SB 483, applies to all kinds and lines of direct insurance written on risks or operations in the state by any authorized insurer, except wet marine and transportation insurance; life insurance; variable and fixed annuities; and health insurance.

“These are important developments in the march toward creating insurance markets all across the country where prices are governed by the market competition,” said Ann Weber, vice president and regional manager for the Property Casualty Insurers Association of America. The law should help to “streamline insurance regulation and more fully embrace free-market principles,” she indicated.

Under New Mexico’s file and use law, property/casualty insurers would be required to file rates with the Division of Insurance, but the rates would not be subject to prior approval regulation. However, the bill maintains prior approval requirements for rates in insurance markets that the superintendent determines are not adequately competitive as well as for workers’ compensation.

New Mexico had operated under prior approval systems where all rates, rules and rating plans had to be filed and approved before going into effect.

PCI believes that type of system makes the insurance marketplace less competitive and more expensive.

The bill had the support of the insurance department and is expected to be signed by Gov. Bill Richardson.