South Dakota Senate Approves File-and-Use Bill


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The South Dakota Senate’s overwhelming approval of a bill to modernize the state’s property/casualty insurance rating system will lay the groundwork to attract new companies to the state.

The Senate last week voted 33 to 2 in favor of S.B. 37, which will establish a file-and-use system for rates for all lines of insurance. The bill is now headed to the South Dakota House Commerce Committee.

“SB 37 is in line with Gov. Michael Rounds’ plan to bring more insurers back into South Dakota after several companies left the state a few years ago,” said Laura Kotelman, regional manager and counsel for the Property Casualty Insurers Association of America (PCI), which was active in promoting the bill. “After all, auto insurers have enjoyed rate freedom for many years in South Dakota. Removal of rating restrictions for all property and casualty lines will bring all lines of coverage into the picture.”

Currently, only private passenger auto enjoys same-day filing for rates in the state. SB 37 also deregulates rates and forms for exempt commercial policyholders (ECPs), which would require a risk manager and more than $100,000 in premium, including workers’ compensation, and two of seven other listed criteria. The proposal is based on the Nebraska legislation passed in 2003.

Rate modernization is an issue that has gained currency in many states as legislators and regulators recognize the need to bring insurance rating into line with contemporary business practices.

“Permitting insurers to file and use rates instead of waiting for departmental approval benefits everyone—insurers, who will be able to react quickly to changing market conditions, consumers who will benefit from the competition, and regulators, who can turn their resources to more pressing issues such as fraud and solvency.”

Officials in North Dakota have indicated an interest in pursuing a similar measure when they are in session in 2005.

“We hope the success of regulatory modernization in South Dakota will encourage North Dakota and other states to adopt similar legislation,” Kotelman added.


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