Abby's Guide to Life Insurance
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Flex rating

There is a new trend in insurance rates that may keep costs down for your insurance company and therefore lower rates for consumers. That’s the idea behind “flex rating”.

Flex rating lets the insurance companies raise rates within a certain percentage “band” without getting state insurance regulator’s review and permission. The eight states that have flex rating in effect report auto insurance rates ten percent lower than the rest of the country, according to the Property Casualty Insurers Association of America (PCI).

The thought is that the insurance companies will keep their rates lower and within the “band” if they can avoid bringing any rate change up for state review. Also states with flex rating are reporting more insurance companies jumping in to do business in those states, increasing competition.

One tends to be cynical about an insurance company carte blanche to raise rates, even within a limit without a review. But if their reasoning holds true, flex rating may become the norm.

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