The bill also applies to homeowners' and related lines of insurance. Unlike auto insurance, though, homeowners' rates are not subject to prior approval.

However, many insurers now submit homeowners' rates for prior review, anyway, to avoid extra work if regulators want them revised after they're already in use.

In addition, the bill would make it easier for drivers who are hit by an uninsured or inadequately insured driver to tap the section in their own policy that's meant to cover such a situation.

The new system of rate regulation called "flex rating" would take effect July 1. Under the current system - considered the strictest - Connecticut has required insurers to get the Insurance Department's prior approval of new rates for the injury liability and uninsured motorist portions of personal auto policies.

Under flex rating, insurers could file rate changes with regulators and use them immediately as long as they average 6 percent statewide or less.

Insurers say states with flex rating or no prior approval have lower auto premiums, on average, than states requiring prior approval. However, that could reflect many other factors, too, such as different levels of traffic congestion and medical and repair costs.

Flex rating "facilitates competition, and competition drives down premiums," said Kristina Baldwin, regional manager and counsel for the Property Casualty Insurers Association of America, a trade group.

Insurers say flex rating frees insurance department staff to focus on rate changes with more consumer impact. And the system encourages insurers to lower rates more quickly because they know they can raise them quickly if needed again, industry officials say.

Flex rating, Sherwood said, "creates an incentive for insurance companies to raise our rates. They no longer have to prove that it's justifiable to raise our rates."

The insurance department would still review rate filings under flex rating, but would no longer be able to reject rates as "excessive" as long as the market was competitive.

The flex rating system would end July 1, 2009, unless legislators vote to continue it. The idea is to give the state a chance to "ensure consumer benefits do, in fact, occur for Connecticut residents, and we are confident that will be the case," Baldwin said.

Auto insurance rates have been stabilizing or dropping in Connecticut and other states. Last year, rate changes in Connecticut averaged out to a 1.1 percent increase. Some insurers, including State Farm and Nationwide, have lowered rates in the past two years.

Under the bill, some territories in Connecticut could see an insurer levy rate increases larger than 6 percent without prior approval as long as the company's statewide average is 6 percent or less. Also, an insurer could raise or lower rates more than once a year if the total stays within 6 percent, on average.

Insurers initially sought a 12 percent level for flex rating, and a legislative committee passed a 4 percent level before the House and Senate adopted 6 percent.

The bill also has a provision aimed at making sure drivers can access their uninsured motorist coverage - the part of a policy that pays for injuries or property damage caused by someone without or with too little insurance.

The bill would prohibit an insurer from making a customer who has an uninsured motorist claim get an affidavit from the uninsured driver saying he or she had no insurance. Driving without auto insurance is illegal, so getting someone to admit to that in writing could be difficult.

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