State-Mandated Insurance Rate and Form Filing System Does Not Work, Report Finds

State-Mandated Insurance Rate and Form Filing System Does Not Work, Report Finds

Insurers, Consumers Hurt Under Current System

Washington, D.C., May 8, 2009—The current system used to file insurance rates and forms does not work and raises constitutional concerns, according to a new report from the Competitive Enterprise Institute.

“The current, government-mandated filing system for insurance rates and claims does not work, harms insurers and, ultimately, consumers, raises serious constitutional concerns,”  said Eli Lehrer, CEI Senior Fellow. “A better system is worth considering.”

All states use the system in question and 19 states mandate it – the System for Electronic Rate and Form Filing (SERFF).  The system is aimed at improving the efficiency of the rate and form filing, the approval processes, reduce time and costs associated with the regulatory filings process.  The way the system works, insurance companies submit rate and form filings to the state departments of insurance and then get back state approval of rate or product changes.

Constitutional concerns arise because the constitutions of nine of the form-using states forbid anyone but the legislature from imposing taxes, and the fees associated with the SERFF could rightly be viewed as a tax imposed by the National Association of Insurance Commissioners (NAIC), the report explains.

The best solution to the SERFF problems is to open the source code to SERFF and allow private companies and others to market their own "SERFF-compatible" software, the report says.  In other words, make the code for the forms publicly available so that anyone could modify and profit from it – not just the NAIC.

Read the CEI OnPoint, SERFF Liberation: The System for Electronic Rate and Form Filing Needs Competition.