An insurer in the United States cannot simply decide to charge more. Insurance is regulated at the state level, and rate changes for most personal lines pass through a review process before taking effect.
Regulation sits with the states, not Washington
Insurance regulation in the US is primarily a state function, exercised by each state's insurance department under its own statutes.
The consequence is fifty-plus sets of rules covering the same national companies, with different filing requirements, different standards and different timelines.
An insurer operating nationally is therefore running many parallel regulatory relationships, and the same product can be priced and sold differently across state lines.
Filings must show how a rate was derived
A rate filing generally sets out the insurer's loss experience, its projected costs, its expenses and the actuarial reasoning connecting them to the proposed rate.
The standard applied in most states is that rates must not be inadequate, excessive or unfairly discriminatory, which cuts in two directions at once.
A rate that is too low is a regulatory problem as well as a business one, because an insurer that underprices may be unable to pay claims later.
States differ in how much they intervene
Some states require approval before a new rate can be used, holding the change until the department signs off. Others allow the rate to be used once filed, subject to later review.
A few operate closer to competitive rating, where filings are recorded but market competition rather than review is relied on to discipline pricing.
Those procedural differences explain why an identical cost increase can reach policyholders promptly in one state and only after a long delay in another.
Rating factors are approved as well as rates
What an insurer is allowed to use as a rating variable is also a regulatory question, and states differ on which factors are permitted for which lines.
Restrictions on particular variables change how risk must be classified, and an insurer that cannot use one factor will lean more heavily on the ones it can.
That is why the same driver or homeowner can be classified quite differently by the same company depending on where the policy is written.
Delay creates its own dynamics
Because filings take time, an insurer's approved rate reflects costs estimated months earlier, and it can fall behind when claim costs move quickly.
An insurer that believes it cannot charge an adequate rate in a state may restrict new business there rather than continue writing at a loss.
Availability and price are therefore linked through the regulatory process, and specifics vary by state and change over time, so the current rules for any given state are what govern a particular policy.