The R Street Institute, a Washington, D.C.-based think tank, has evaluated the regulatory flexibility of property and casualty (P&C) insurance markets across all 50 states. The assessment focused on underwriting freedom, which includes factors such as the ease of implementing new premium rates, the use of credit scores in underwriting, territorial restrictions, and “desk drawer rules”—unpublished directives that can delay or block filings.
California received the lowest score in the nation for underwriting freedom with a -6. The state scored zero points for rate regulation and negative points for credit scoring, territory use, and desk drawer rules. According to the R Street Institute, this creates an unpredictable environment that can hinder innovation.
New York followed closely with a score of -5. Its reliance on desk drawer rules contributes significantly to its low score. Hawaii and Maryland both scored -4. These states ban credit-based scoring and impose additional restrictions; Hawaii lacks regulatory transparency while Maryland limits geographic data usage in rate filings.
Conversely, Wyoming topped the list with an underwriting freedom score of 25. The state allows open competition across major lines without imposing limits on credit scoring or territorial underwriting. It also avoids using desk drawer rules, allowing insurers to quickly adapt to market changes.
New Mexico also ranked highly due to minimal regulatory constraints and a laissez-faire approach to filings. Utah was noted for its use-and-file regime supporting various rating inputs like credit scoring.
The report highlights how agile jurisdictions like Wyoming and New Mexico allow insurers to launch new product lines rapidly. In contrast, restrictive states such as California or Maryland could face prolonged processes influenced by political factors. This is particularly relevant as insurers develop their growth strategies for 2025 amid climate volatility and evolving market dynamics.
