Clearinghouse, agent appointments and rate adequacy frustrate Fair Plan depopulation efforts
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Summary
Committee heard that statutory broker appointment rules, low clearinghouse participation and inadequate rates are major barriers to depopulating Fair Plan policies back to admitted carriers; Fair Plan said it will make broker training mandatory and pursue operational fixes.
Lawmakers and witnesses at the Assembly hearing focused on the clearinghouse established to help move policies from the Fair Plan back to admitted carriers and on broker behavior that can limit depopulation.
Victoria Roach said the legislature designed the clearinghouse so the broker (agent) retains the customer relationship, and that brokers who are not appointed with a carrier that wants the business may not move policies even when capacity exists. She said the Plan has about 15 member companies signed up to access the clearinghouse and that brokers who have many policies with the Plan must take product training that will soon be mandatory to receive CE credit.
Industry witnesses including the Personal Insurance Federation and the Farm Bureau urged making the clearinghouse and commercial clearinghouse work better to reflect parcel-by-parcel risk and to improve appointment or access rules. Roach acknowledged the clearinghouse is a barrier that limits movement and said some policy transfers have occurred (industry brokers reported about 200 moves), but that there is no built-in way for the Plan to force transfers.
Members asked whether raising the Plan policy limit (the transcript referenced a roughly $3.0–3.3 million filing limit) would help; Roach said raising limits would be considered only if actuarially sound rates accompany any higher limits because the Plan currently runs at a member deficit and must be fiscally responsible.
