The U.S. insurance regulatory environment is complex and difficult to navigate, even for experienced professionals. Modern analytics can be applied to publicly available insurance product filing data to produce actionable regulatory insurance intelligence that demystifies the insurance regulatory world.

A key metric, called “rate filing average days to approval,” is calculated from publicly available data and can aid filers like insurance companies, managing general agents, and others in decision-making and formulating insurance product rollout schedules. This paper discusses rate filing average days to approval for the personal auto and homeowners lines of business in several states, how it is determined, and how it can be used to maximize resources and reduce overall time to market.

This paper has been updated from the version published on February 28, 2024. This updated version contains filings through 2024 Q1 and different sets of states.

What is rate filing average days to approval and why is it important?

When developing or revising insurance products it is important to recognize that the natural and man-made hazards to which people and property are exposed (e.g., wildfires, hurricanes, sinkholes) differ by state, as do the laws, regulations, “desk drawer rules” (i.e., internal rules that a state’s Department of Insurance [DOI] may have that are not published), and filing requirements with which companies need to comply to receive state regulatory approval. In addition, the unique political, legal, social, economic, and other issues present in each state (e.g., potential claims fraud, affordability challenges, a recent catastrophic event) influence what each state’s DOI focuses on during its regulatory review. All these factors, including DOI staffing, resources, and outsourcing of reviews, contribute to regulatory review times that significantly vary by state and by line of business (LOB).

Rate filing average days to approval are estimates of the average number of days that it takes for a rate filing to be approved by a state DOI once it has been submitted for review. One of the most important use cases of state approval data is to determine where and when to launch new insurance products or to facilitate multistate changes to existing products. To best utilize the rate filing average days to approval metric, a filer must first consider the goals of its product filing.

For example, if the company’s goal is to launch a new program as quickly as possible, then the company can identify which states are generally the quickest to complete their reviews. Filing in these states first would allow the company more time to start collecting exposure and loss experience data once the product has gone live. This data can then be used to fine-tune the product before entering more rigorously regulated states. Filing a tested and proven product in states with longer expected approval times can save the company time in the future because any adjustments to the new program filing are subject to the same longer state regulatory approval times. In addition to having a more tested and proven product before filing in states with longer approval times, a company filing first in states with shorter approval times will be able to collect policy premium earlier and test whether its insurance product is attracting the targeted policyholders. This could allow companies, especially startups, the opportunity to better forecast whether their insurance programs will be profitable and, if so, what funds are needed to pursue the next phase of filings.

Alternatively, if the company’s goal is to launch a new program across all states at approximately the same time, it may choose to prioritize filings for states that generally have longer review times. This allows regulators in these states more time to complete their reviews, while the remaining state filings are being prepared and submitted for approval. Further, states that have longer review times are generally more rigorously regulated and require more filing support, so preparing additional support for the first several states can lead to efficiencies when filing in future states. These more rigorous states may also require changes in the program that can be implemented countrywide. Therefore, by starting in the rigorous states, the company may have the option to adjust its countrywide filing material instead of having state-specific filing material. A consistent countrywide product would make programming the insurance product easier on the company.

It is important that filers are aware of and stay up to date on state-specific laws, regulations, guidelines, and other rules enforced by each DOI, so that the filer can prepare filings that meet each DOI’s expectations. This preparation facilitates more efficient regulatory filing reviews by the DOIs, informs company go-to-market strategies, and aligns stakeholder expectations. Submitting filings that overlook state-specific requirements may result in more DOI questions (in the form of objections) or outright disapproval of the filing, which will extend regulatory review times and challenge the company’s overall project timelines and goals. Overlooking state requirements may also result in future fines resulting from market conduct examinations finding noncompliance with a state requirement even after a filing has been approved.

Analysis results: Private passenger auto rate filings

The results of the analysis are summarized on the following heat maps. Figure 1 is a heat map of the rate filing average days to approval for private passenger auto (PPA) rate filings approved from 2019 through March 31, 2024, for selected states.

The table in Figure 2 summarizes private passenger auto rate filing average days to approval for each selected state by calendar year in which the rate filing was approved. The “Countrywide” row includes all states across the country, including those not shown in each figure, and is used to calculate how many days each state differs from the countrywide (CW) average.

Analysis results: Homeowners rate filings

Figure 3 is a heat map of the rate filing average days to approval for homeowners (HO) rate filings approved from 2019 through March 31, 2024, for a different set of selected states.

The table in Figure 4 summarizes rate filing average days to approval for each selected homeowners state by calendar year in which the rate filing was approved and includes the difference of approval days from the countrywide average.

The averages for each approval year may be used to understand whether a state is trending toward shorter or longer review times. Additionally, each state’s difference from countrywide may be used to indicate whether a state generally takes more time than average, illustrated by a positive value, or less time than average, illustrated by a negative value.

Conclusion

The data presented in Figures 1 through 4 can be used to estimate timelines and inform a program filing schedule for product changes or expansion into new states or lines of business. For example, if the filer’s goal is to implement a rate change across several states at the same time, before having access to the information in Figure 3, then the insurer could unknowingly start to submit filings in faster-to-review states such as Alabama, Arizona, and Pennsylvania. The rate filings in these states are likely to be approved over the next month, while the submission of filings in longer-to-review states would just be starting. This could result in the longer-to-review states, such as Colorado, Florida, and Minnesota, taking an additional two to 12 months after the first batch of states, resulting in a total of 13 months to get all the states in Figure 3 approved.

Instead, the filer could review the data in Figure 3 and determine that rolling out the rate change across all the states listed may be completed a month quicker by filing in the longer-to-review states first. The remaining states can then be filed while the first set of states are reviewing. This would result in every state in Figure 3 getting approved within 12 months from the first filing submission. Further, the longer-to-review states are often the larger premium volume states, such as Florida, so this approach may also move toward the company’s profitability targets quicker. It is important to realize this strategy may not work best for all companies, so considering a company’s goals is crucial when selecting the order of states to file in.

The data presented in Figures 1 through 4 can also be used to see whether a company should encourage legislative change to have rate filings approved. For example, the average PPA rate filing in Colorado takes 373 days from initial filing to approval. With the gap between filing submission and filing approval being greater than a year, it can be determinantal not only for companies trying to enter the auto insurance market but also for existing companies that are not able to adequately adjust their rates after the initial filing has been approved.

While it is possible that individual filing reviews could be longer or shorter than the historical averages, having information to optimize the order of filing submissions can be used by filers to gain efficiencies, reduce time to market, respond to market demands and evolving risk, and provide a competitive advantage. The information about filing review times can also be used to inform company stakeholders so that they can align schedules and expectations for a successful implementation that supports company growth, profitability, budgeting, resource allocation, and other initiatives.

¹ PPA filings included the following types of insurance: personal auto combinations, private passenger auto, motorcycle, recreational vehicle (RV), and other auto.

² HO filings included the following types of insurance: homeowners sub-TOI combinations, condominium, mobile homeowners, owner-occupied, tenant, and other homeowners.

³ Each DOI has its own way of indicating that filings are approved for use. The following are examples of disposition statuses that are considered approved for the purposes of this analysis: acknowledged, approved, file and use, filed, recorded effective as submitted, reviewed, etc.