Mich. Admin. Code R. 500.1507 - Expense allocation

Current through Vol. 22-05, April 1, 2022

Rule 7.

(1) Expense provisions for each category of expenses must be reasonably allocated among classifications in a manner that equitably reflects variations, if any, in the manner in which those expenses are anticipated to be incurred with respect to the groups of individuals or risks defined by those classifications. Expenses, other than allocated loss adjustment expenses, must not be presumed to be incurred proportionally to classification relativities based on anticipated loss.
(2) Expense provisions for premium taxes, if any, must reflect the applicable premium tax rate.
(3) Expense provisions for each other category of expenses must be reasonably allocated among classifications based on losses, coverages, exposures, or other basis that equitably measures the variations, if any, in the manner in which those expenses are anticipated to be incurred with respect to the classifications. Expense allocation methods may include percentage-of-premium, uniform-per-coverage, uniform-per-exposure, or other basis, as appropriate and justified.

Notes

Mich. Admin. Code R. 500.1507
1981 AACS; 2021 MR 6, Eff. 3/24/2021

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