Regulator Objections Delay Insurance Rate Approvals, Says ZestyAI
ZestyAI analyzed tens of thousands of insurance rate filings and found that regulator objections can significantly delay the approval process, with 44% of filings drawing at least one objection
The insurance industry is facing significant delays in the approval of rate filings due to regulator objections. According to ZestyAI, a property risk analytics platform, 44% of filings analyzed drew at least one objection from a state regulator, adding a median of 38 days to the approval process. This delay can have significant consequences for insurers, as they are forced to write business at a rate that they have already demonstrated is inadequate.
Impact on Insurers
The delay in approval can result in increased costs for insurers, as they are unable to implement rate changes in a timely manner. As Bryan Rehor, senior director of regulatory and government affairs at ZestyAI, noted, "Every month a filing sits in objection is a month the carrier is writing business at a rate it has already demonstrated is inadequate." This can lead to a compounding effect, where the cost of the delay increases over time.
Objection Rates by Line of Business
ZestyAI's analysis found that the objection rate varies by line of business, with homeowners being the most contested line, followed by personal auto and commercial property. The objection rates for each line of business are as follows:
| Line of Business | Objection Rate |
|---|---|
| Homeowners | 53.2% |
| Personal Auto | 50.7% |
| Commercial Property | 34.3% |
State-by-State Approval Times
The approval times for rate filings also vary by state, with some states having significantly slower approval times than others. California and New York led among the states with the slowest approvals across all lines, while Wisconsin was the fastest in each line. The approval times for each state are influenced by a variety of factors, including the complexity of the filing and the level of regulator scrutiny.
Strategies for Avoiding Delays
To avoid delays in the approval process, insurers can take steps to prepare high-quality filings that address potential regulator concerns. According to Rehor, "Knowing what regulators are likely to ask before filing, and answering those questions in the original submission, can reduce avoidable follow-up and bring products to market weeks or months sooner." By taking a proactive approach to regulator objections, insurers can reduce the risk of delays and ensure that their rate filings are approved in a timely manner.
