Connecticut's flex-rating system for car and home insurance will continue for two more years, under a law passed by the Connecticut Legislature.
The state's flex-rating law lets insurance companies raise or lower home and car insurance rates by 6 percent annually without prior approval from state regulators; however, insurers must still get approval for rate changes of more than 6 percent.
Connecticut first allowed flex rating in 2006. The system was due to expire in 2009 when legislators extended it for two years. The new law extends flex rating to July 1, 2013.
Insurance companies say flex rating helps stabilize the insurance market by allowing them to respond to changing conditions.
"Personal lines insurance markets remain very competitive in Connecticut, due in part to the flex-rating law," Kristina Baldwin, assistant vice president of state government affairs for the Property Casualty Insurers Association of America (PCI), said in a media statement. "This system allows insurers to respond to competitive market conditions and determine appropriate rate level changes. Flex rating is beneficial to consumers as prices are more stable and the insurance marketplace becomes more competitive."
PCI also praised the Legislature for defeating an auto body and glass measure that it said could have limited insurance companies' ability to inform consumers about all their repair options or provide a warranty on repair work.