New York Deregulates Commercial Pricing

The state of New York signed a bill into law that deregulates P&C premiums for insureds with greater than 15 million in sales and greater than 25K in premium. This move is an effort to spur more competitive rate environment for commercial insurance. Most States have a entry point in premium and or sales for deregulation of commerical pricing. This move, though good for consumers, may work against stabilization of markets. There is a fine line in competitive rate promulgation and market stability mainly due to the fact that claims have to be paid. Underwriting to a profit is no longer the norm in insurance carriers. Most carriers depend on the financial markets to make money. History shows that carriers will follow each other into a lowest rate game in order to get business. However each new account is way underpriced and eventually the claims come home to roost. This means that a few insurers will go out of business and that is bad for consumers. I can remember back in the late 90's when Reliance was beating the pants off of every other insurance carrier with their pricing. As an agent/broker we were saddled with trying to convince insureds that the pricing was "to good to be true", but to no avail , as insureds grabbed up the low priced policies. Eventually the shoe dropped on Reliance and they went out of business. Deregulation of insurance is neccessary in many circumstances to help insureds afford premiums. However the downside is that a deregulated market will drive some insurers out of business.  Until next time be careful out there and know your risks.
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