Mich. Admin. Code R. 500.1301 - Definitions
Rule 1. As used in these rules:
(a) "Classification" means a grouping of
individuals or risks on the basis of 1 or more characteristics for purposes of
measuring and rating differences in anticipated losses or expenses, or both.
For purposes of these rules, a classification shall not include a grouping of
individuals or risks solely for statistical data gathering purposes.
(b) "Code" means Act No. 218 of the Public
Acts of 1956, as amended, being S500.100 et seq. of the Michigan Compiled Laws,
and known as the insurance code of 1956.
(c) "Commissioner" means the Michigan
commissioner of insurance and the designees of the commissioner.
(d) "Loss portion" means that portion of a
rate which is attributable to provisions for incurred losses and allocated loss
adjustment expenses.
(e) "Loss
ratio" means, for purposes of
R
500.1307(4)(e), any of the following
ratios for a specified time period, as appropriate for the context of
evaluation:
(i) The ratio of actual incurred
losses and allocated loss adjustment expenses to total earned premiums at
collected rate levels.
(ii) The
ratio of actual incurred losses and allocated loss adjustment expenses to total
earned premiums at current rate levels.
(iii) The ratio of reasonably anticipated
incurred losses and allocated loss adjustment expenses to total estimated
earned premiums at proposed rate levels.
(f) "Private residential property insurance"
means insurance for an individual's residence, including insurance for an
owner-occupied condominium unit, insurance for owner-occupied residential
dwellings containing 4 or fewer apartments or condominium units, and insurance
for a tenant of a room, an apartment, or a house, provided by a Michigan
standard policy as set forth in section 2832 of the code and, when contained in
or indorsed to a Michigan standard policy providing insurance for an
individual's residence, other insurance intended primarily to insure
residential property, obligations, and liabilities. Private residential
property insurance shall not include insurance intended to insure commercial,
industrial, professional, or business property, obligations, or
liabilities.
(g) "Rate
differential" means either the ratio of rates for any 2 rating cells or the
absolute difference in rates for any 2 rating cells, whichever is applicable
for a particular rating system.
(h)
"Rating cell" means a group of individuals or risks for which a single rate is
determined when 2 or more rating classifications are combined to define a
population of individuals or risks for rating purposes.
(i) "Relativity" means either the ratio of
rates for any 2 rating classifications or the absolute difference in rates for
any 2 rating classifications, whichever is applicable for a particular rating
system.
(j) "Uncertainty of loss"
means a measure of the nature and the extent of the variability of actual
losses for a group of individuals or risks from the mean anticipated loss for
the group and includes other similar measures of risk.
(k) "Underwriting" means the offer or refusal
to insure, the offer or refusal to continue to insure, or the limitation of the
amount of coverage available to an individual, risk, or class of individuals or
risks.
Notes
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