From Business Insurance:

Vermont again has the best insurance regulatory environment, while Delaware has the worst among U.S. states, according to a new report.

Vermont has been named as having the best regulatory environment for the fourth straight year and the fifth time in six years amid developments such as Gov. Phil Scott signing H. 85 to expand the state’s captive insurance regulatory regime to cover agency captives in May, according to Washington-based conservative think tank R Street Institute’s 2017 Insurance Regulation Report Card published Tuesday.

Vermont earned the only A+ in this year’s report card, while Arizona, Idaho, Utah, Nevada and Wisconsin received either an A or A-.

Driven largely by changes made in its regulatory environment through the H.B. 80 legislative package, Delaware for the first time had the worst score in the country, just narrowly edging out North Carolina, which had placed last the previous two years. The package imposed an “onerous regulatory regime” similar to California’s Proposition 103 for home and auto insurance, according to the report.

Delaware received an F, as did North Carolina, Louisiana and Massachusetts.

The biggest improvements in this year’s report card were seen in Florida, Michigan, Pennsylvania and Tennessee, while the biggest declines were seen in Delaware and New Hampshire, according to the report.

R.J. Lehmann, study author and R Street’s director of finance, insurance and trade policy, cited the continued contraction of the nation’s residual property insurance plans, which fell from $3.39 billion or 3.3% of the market in 2011 to $2.06 billion or 1.7% in 2016, among the positive trends tracked in the study. Most notably, Florida’s state-run Citizens Property Insurance Corp. has seen its market share drop to just 4.3% of the market from 14.3% of the market over that span, according to the report.

“The steps Florida lawmakers and regulators took to shrink Citizens allowed it to absorb an estimated 62,000 claims and $1.2 billion in insured losses from the strike of Hurricane Irma this past year without any notable impairment,” Mr. Lehmann said in a statement. “It is in recognition of these improvements that Florida, which was the bottom-ranked state in our first report card in 2012, has clawed its way to a very respectable B grade for 2017.”

“Last year saw a significant effort to liberalize rate controls for commercial insurance lines in Missouri and a successful effort to do so in Oregon,” he continued. “On the other side of the ledger is Delaware, which imposed significant new restrictions on underwriting freedom. Illinois — long among the most free-market insurance environments in the nation — was spared from the introduction of stringent controls on its workers compensation market only by the legislature’s failure to overturn Gov. Bruce Rauner’s veto.”

There were also major regulatory developments on the federal level, the report noted.

“The biggest insurance regulatory news of the year arrived in its first two weeks when the lame-duck Obama administration’s Treasury Department announced it had successfully concluded negotiations with European Union counterparts on a ‘covered agreement’ governing a range of insurance regulatory issues that long had bedeviled cross-Atlantic supervisory authorities,” the report said. “Under the agreement, which the United States and the EU ultimately signed in September, U.S. states must eliminate statutory collateral and local presence requirements for EU reinsurers doing business in the United States. Meanwhile, U.S. insurers operating in the EU are relieved of having to comply with certain group capital, governance and reporting requirements.”

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