Section 1. Purpose
The purpose of this Rule is to set forth rules and procedural
requirements which the Commissioner deems necessary to carry out the provisions
of Ark. Code Ann. §§
23-67-201, et
seq., § 23-57-219, §
23-79-109
and §
23-79-110,
as to rate and form filings of property, casualty, surety, and marine
insurers.
Section 2.
Authority
This Rule is issued pursuant to the authority vested in the
Commissioner by Ark. Code Ann. §
23-61-108, §§
25-15-202
et seq., §
23-67-218,
and other applicable provisions of Arkansas law.
Section 3. Applicability and Scope
This Rule applies to insurance described in Ark. Code Ann. §
23-67-203, and
insurers, rate service or advisory organizations, joint underwriting
associations and joint reinsurance organizations making filings under Ark. Code
Ann. §§
23-67-201, et
seq., §
23-67-219
and §
23-79-109,
subject to any exemptions the Commissioner may order pursuant to Ark. Code Ann.
§
23-67-206.
Section 4. Effective Date
Prospective loss costs means that portion of a rate that does not
include provisions for expenses (other than loss adjustment expenses) or
profit, and are based on historical aggregate losses and loss adjustment
expenses adjusted through development to their ultimate value and projected
through trending to a future point in time.
H. Participating Insurer.
Participating insurer means any member, subscriber or service
purchaser of an advisory organization.
Section 6. Rate Service Organizations
A. Advisory Organizations - Permitted
Activity.
Every advisory organization shall file with the Department every
advisory document thirty (30) days prior to the effective date. The Department
may extend the review period an additional thirty "(30) days by written notice
to the filer before the thirty (30) day period expires. Any advisory
organization, in addition to other activities permitted, is authorized
to:
1. Prepare and distribute rates,
supplementary rate information and supporting information in accordance with
Ark. Code Ann. §
23-67-216
and §
23-67-219;
however, such filings are for advisory purposes only and shall not be made on
behalf of any insurer.
2. Prepare
and file on behalf of members and subscribers, policy forms and endorsements
and consult with members, subscribers and others relative to their use and
application.
3. An advisory
organization may develop and make reference filings containing advisory
prospective loss costs in accordance with Ark. Code Ann. §
23-67-216.
Such filings shall contain the statistical data and supporting information for
any calculations or assumptions underlying those prospective loss
costs.
4. Final rates for residual
markets may be prepared and filed by the Plan Administrator as directed by the
Department.
B. Advisory
Organizations - Prohibited Activity.
1. An
advisory organization cannot file any plan of rates or supplementary rate
information on behalf of an insurer.
2. An advisory organization cannot file,
distribute or compile recommendations relating to rates that include expenses
(other than loss adjustment expenses) or profit except in the lines of
insurance as may be designated by the Commissioner. An advisory organization
may, however, provide insurers with an annual study of aggregate average
expense data and investment income.
Section 7. Procedures for Rate and
Supplementary Rate Information Filings
2.
Supporting Information Required to Supplement the Filing.
a. Each rate and rule filing submitted shall
be accompanied by the Rate Filing Abstract (Form RF-1). If you are making a
loss cost reference filing see Section 7(A)(3). Rate and rule filings for
Homeowners Insurance and Private Passenger Automobile Insurance must also
include the Private Passenger Automobile Abstract (Form A-l), Survey Form APCS
or Homeowners Abstract (Form H-l) and Survey Form HPCS. Rate and form filings
must be made separately. (See Section 8, Procedures for Form Filings, below).
The following required documentation should be identified as an exhibit in the
filing, and the exhibits should be numbered to correspond directly with the
listing of documentation. If an item required is not available or is
inapplicable, a statement should be included that specifies the inapplicability
or unavailability of the particular item.
b. Explain the type of loss information
utilized in this rate filing. Specify whether the data reflects a calendar
period, accident period, or policy period.
(1) If calendar period information is used,
explain any adjustments that have been made to reflect changes in those
estimated loss liabilities based on actual claims, and changes in incurred but
not reported estimated loss liabilities. If a provision for incurred but not
reported estimated loss liabilities is included, specify the calculation
changes over the experience period, and the distribution among coverages and
states. Loss development factors should be shown by coverage both for Arkansas
and countrywide for the past five (5) years.
(2) If*policy or accident period data is
used, explain any tests or adjustments that were made to loss development
factors so as to make them appropriate for use in this filing. Loss development
factors should be shown by coverage both for Arkansas and countrywide for the
past five (5) years.
c.
If the methods used in this filing differ from those used in the insurer's last
rate filing for this coverage in Arkansas, or if the Arkansas methods differ
from those used countrywide, attach an explanation of the
differences.
d. Explain any
adjustments for large or catastrophic losses that were made in the statistical
information on losses.
e. Display
the calculation of the estimate of investment income on net unearned premiums
and loss reserves.
f. Display the
calculation of any loading or contingency factor which is used in this
filing.
g. Display underwriting
expenses. State procedures used in the filing to recognize the distinction
between expenses which vary directly with losses, and expenses such as general
expenses, which do not vary. company's loss cost adjustments.
(3) Pay the appropriate
fees.
(4) Indicate the insurer's
proposed effective date.
b. Upon subsequent
revision by an advisory organization of a loss cost filing, an insurer having
requested to have its loss cost adjustment applicable to subsequent filings
must:
(1) Give notice of its intent to adapt
by submitting a cover letter so stating and provide the advisory organization's
reference document number.
(2) Fay
the appropriate fees.
(3) Provide a
copy of the previously filed RF-2 indicating that the loss cost modifier will
be applicable to future filings.
c. If an insurer who has filed to have its
loss cost adjustments remain on file with the Department intends to delay,
modify, or not adopt a particular advisory organization's loss cost reference
-filing, the insurer must notify the Department in writing. The insurer's
on-file loss cost adjustments will remain in effect until disapproved by the
Department,withdrawn by the insurer or until the insurer files and receives
approval of a revised Form RF-2.
d.
To the extent that an insurer's final rates are determined solely by applying
its loss cost adjustments to the prospective loss costs contained in an
advisory organization's reference filing, the insured need not develop or file
its final rate pages with the Department. If an insurer chooses to print and
distribute final rate pages for its own use, based solely upon the application
of its filed loss cost adjustments to an advisory organization's prospective
loss costs, the insurer must file those pages with the Department. If the
advisory organization does not print the loss' costs in its rating manual, the
insurer must submit its rates to the Department.
e. Nothing in these procedures shall be
construed to require advisory organizations or their participating insurers to
immediately refile rates previously implemented. Any participating insurer of
an advisory organization is authorized to continue to use all rates and
deviations filed for its use until disapproved, or the insurer makes its own
filing, or files Form RF-2 adopting the advisory organisation's prospective
loss costs or a modification thereof.
B. Procedures for Rate and Supplementary Rate
Information Filings. For Workers' Compensation and Employers' Liability
Insurance.
Manuals of classifications, rules and rates, rating plans, and
every modification of any of the foregoing which an insurer proposes to use for
workers' compensation and employers' liability insurance must be approved or
deemed approved by this Department before such manual, rules and rates or
rating plan can be used. Insurers may file independently or by reference to the
loss costs, supporting information or supplementary rate information filed by
an advisory organization. Insurers may file deviations to the loss costs filed
by an advisory organization.
insurer's last rate filing for this coverage in Arkansas, or if
the Arkansas methods differ from those used countrywide, attach an explanation
of the differences.
d. Explain any
adjustments for large or catastrophic losses that were made in the statistical
information on losses.
e. Display
the calculation of the estimate of investment income on net unearned premiums
and loss reserves.
f. Display the
calculation of any loading or contingency factor used in this filing.
g. Display underwriting expenses. State
procedures used in the filing to recognize the distinction between expenses
which vary directly with losses, and expenses such as general expenses, which
do not vary.
h. State steps taken
to control losses for the coverages included in this filing.
i. Explain any adjustments made by the
trending components of the filing. If significant trends within this State are
utilized, a narrative describing the basis of the trend must by
included.
j. The determination of
the weighting of credibility assigned to Arkansas must be fully
explained.
k. If common classes are
grouped together for rate making purposes because the data far one particular
class is not credible either for Arkansas or countrywide, all class codes
utilized in developing credibility must be stated with Arkansas experience for
each class affected shown separately.
1. Any
additional information the Department may require.
3. Rate Filing Deadlines.
The proposed effective date of the filing shall be not less than
thirty (30) days after the filing has been received by the Department. If the
information which supplements the filing in accordance with Section 7(B) (2) is
not sufficient for the Department to determine whether the filing meets the
requirements of Ark. Code Ann. §
23-67-219,
the Department will notify the filing insurer or advisory organization. If the
insurer or advisory organization is required to submit additional information,
the effective date of the proposed filing shall not be less than thirty (30)
days after such "* information is received by the Department.
4. Maintenance of Uniform Data Base.
Independent filings based upon a classification system other than
the classification system filed by a designated advisory organization must be
accompanied by an explanation of the method the insurer will utilize to compile
and report data in compliance with Ark. Code Ann. remain on file with the
Department: intends to delay, modify, or not adopt a particular advisory
organization's loss cost reference filing, the insurer must notify the
Department in writing. The insurer's on-file loss cost adjustments will remain
in effect until disapproved by the Department, withdrawn by the insurer or
until the insurer files and receives approval of a revised Form RF-VC.
d. Final rate pages for all workers'
compensation classification codes must be filed with the Department.
e. Nothing in these procedures shall be
construed to require advisory organizations or their participating insurers to
immediately refile rates previously implemented. Any participating insurer of
an advisory organization is authorized to continue to use all rates and
deviations filed for its use until disapproved, or the insurer makes its own
filing or files Form RF-VC adopting the advisory organization's prospective
loss costs or a modification thereof.
Section 8.
PROCEDURES FOR FORK FILINGS - All Lines.
All forms submitted for review must comply with the applicable
provisions of Ark. Code Ann. §§
23-79-101,
et seq. Pursuant to Ark. Code Ann. §
23-79-109,
this Section shall not apply to surety bonds, nor to policies, riders,
endorsements, or forms of unique character designed for and used with relation
to insurance upon a particular subject.
1. Filing Cover.
a. I£ a copy of the filing, bearing the
appropriate stamp of the Department, is to be returned to the filer, two (2)
copies of the filing cover letter of submission are required together with a
postage paid envelope addressed to the filing insurer, insurance holding
company group, or advisory organization. One (1) copy of the filing cover
documenting the action taken by the Department will be returned to the filing
insurer, insurance holding company group, or advisory organization. An
additional copy of the filing cover for each affiliated company utlizing the
documents is required. In addition, the entire filing packet, consisting of all
filings, supporting information and exhibits, shall be sequentially numbered or
contain a table of contents, and the total number of pages comprising the
filing packet shall be referenced in the filing cover.
b. The filing cover must include sufficient
information to identify the forms contained therein completely without need for
further reference to attached memoranda, forms, exhibits.or other
documents.
c. If the information
required by Section 8(2) below is not included with the filing, the filing
shall be deemed incomplete and will not be reviewed.
d. Any insurer may satisfy its obligation to
submit form filings by becoming a member of or subscriber to a licensed
advisory organization which makes filings on its behalf, provided that nothing
contained in this Regulation shall be construed as requiring any insurer to
become a
ARKANSAS INSURANCE DEPARTMENT
1123 South University, Suite 400
Little Rock, AR 72204
501-686-2975
ARKANSAS RATE FILING ABSTRACT FORM
INSTRUCTIONS
The attached form is for inter-departmental purposes to track
company loss costs. Companies are required to complete this form although some
of the information requested is a duplication of information provided
elsewhere.
1.
Line of
Insurance fBv Coverage): List each coverage that is separately
rated or which has a separate loss cost multiplier, for example, Auto BI, PD,
Phy. Damage, etc.
2.
Indicated % Rate Level Change: Percent of change as
indicated through actuarial date for each coverage as listed in column 1. Show
overall change at bottom of column.
3.
Requested % Rate level
Change: Chosen rate level change. Show by coverage as listed in
column 1. Show indicated overall rate change at bottom of the column.
4.
Expected Loss
Ratio: Enter expected loss ratio as shown on Form RF-2, Item 4(A),
or Form RF-WC, Item 4(A) for Workers' Compensation.
5.
Loss Cost Modification
Factor: Enter the loss cost modification factor as shown on From
RF-2, Item 2(A) or Form RF-WC, Item 2(A) for Workers' Compensation.
6.
Selected Loss Cost
Multiplier: Enter the loss cost multiplier as shown on From RF-2,
Item 6 or Form RF-WC, Item 8 for Workers' Compensation.
7.
Expense Constant:
Enter the selected company expense constant as developed in Item 6 of Page 3,
Form RF-2 (if applicable).
8.
Company Current Loss Cost Multiplier: Enter the loss
cost multiplier for each coverage currently on file with the Department. If
this is a first-tune conversion from rates to loss costs, enter the Bureau's
underlying LCM.
Future Filings: Indicate with Yes or No,
whether the submitted loss cost factors are to apply to future filings.
Maximum Rate Increase/Decrease: Indicate
the estimated maximum rate increase and decrease applicable to the filing being
submitted and give territory affected.
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