28 Tex. Admin. Code § 5.9332 - Categories of Supporting Information
The categories of supporting information addressed in this section describe the different items that may be required or requested in a rate and rule filing. Section 5.9334 of this title (relating to Requirements for Rate and Rule Filing Submissions) lists the categories of supporting information that different rate and rule filings require. Categories of supporting information include:
(1)
Rate filing checklists. These are found in the Filings Made Easy Guide and show
the information filers need to include with the filing.
(2) Actuarial memorandum. This memorandum
describes the methodologies for determining each component used in developing
the actuarial support, and a qualitative discussion on the selections for each
component. It includes an explanation for any changes in methodologies or any
changes to the component selections from the previous analysis.
(3) Actuarial support. This type of support
consists of sufficient documentation and analysis to allow a qualified actuary
to understand and evaluate the rates, each component used in developing the
rates, and the appropriateness of each material assumption. Actuarial support
is divided into the following subcategories:
(A) Rate indications consist of the analyses
the insurer relies on to support its filed rates, each component used to
develop the rate indications, and support for each of these components,
including the data and methodologies used by the insurer. Rate indications may
be on an overall basis or by coverage, class, form, or peril when appropriate.
Rate indications must include each of the following with documentation in
support of each, to the extent applicable:
(i)
premiums, on-level factors, and premiums at current rate level;
(ii) incurred and paid losses;
(iii) loss and claim development
factors;
(iv) premium and loss
trend factors;
(v) hurricane and
nonhurricane catastrophe factors or loss provisions, including the definition
of a catastrophe and how the definition has changed over the experience period
used to calculate the provisions;
(vi) off-balance factors if there are changes
in relativities, for example: discounts, surcharges, or territorial
definitions;
(vii) the measure of
credibility, the complement of credibility, the criteria for full credibility,
and the method for determining partial credibility;
(viii) expenses, including: general expenses;
other acquisition expenses; commissions and brokerage expenses; taxes,
licenses, and fees; loss adjustment expenses; and expense offsets from fee
income;
(ix) the net cost of
reinsurance;
(x) for rates filed
under Insurance Code Chapter 2251, concerning Rates, profit provisions,
including risk loads;
(xi) for
rates filed under Insurance Code Chapters 2053, concerning Rates for Workers'
Compensation Insurance, and 3502, concerning Mortgage Guaranty Insurance,
profit and contingency provisions, including risk loads;
(xii) the effect on premiums of individual
risk variations based on loss or expense considerations; and
(xiii) any other component used in developing
a rate indication.
(B)
Relativity analysis consists of both the analysis and support for the selected
rating factors, including the loss experience and methodologies used by the
insurer to derive the indicated rating factors. Supporting information must
include:
(i) the current relativity;
(ii) the indicated relativity;
(iii) support for the indicated relativities,
including the loss experience and methodologies used by the insurer to derive
the indications;
(iv) the selected
relativity;
(v) support for the
selected relativities if they differ from the indicated relativities;
and
(vi) the percent change from
current to selected relativity.
(C) Other actuarial support consists of both
the analysis and support for the selected rates, including the loss experience
and methodologies used by the insurer to derive them. The support must clearly
demonstrate why the proposed rates are not excessive, inadequate, or unfairly
discriminatory. A rate is reasonable and not excessive, inadequate, or unfairly
discriminatory if it is an actuarially sound estimate of the expected value of
all future costs associated with an individual risk transfer. These costs
include claims, claim settlement expenses, operational and administrative
expenses, and the cost of capital.
(4) SERFF rate data. This data consists of
all information necessary to complete the company rate information fields in
SERFF.
(5) Policyholder impact
information. Policyholder impact information must reflect the changes for all
policyholders. This information consists of the following provided separately
by form or coverage:
(A) a histogram that
graphically depicts the impact of the filed changes to policyholders in 5
percentage point intervals;
(B) the
policy counts in each interval displayed in either the histogram or a separate
table;
(C) the minimum and maximum
policyholder impact; and
(D) a
description of the changes that contributed to the minimum and maximum
policyholder impact.
(6)
Average rate change by county. This is the average impact of all changes
included in a filing by county, provided separately by form or
coverage.
(7) Rate change
information. Rate change information must reflect the changes for all
policyholders.
(A) For loss cost reference
filings, rate change information consists of:
(i) the proposed percentage change in the
underlying loss costs;
(ii) the
change in the insurer's loss cost multiplier;
(iii) the combined change in the loss costs
and the loss cost multipliers;
(iv)
a six-year rate change history; and
(v) the effect that changes in fee income
have on the total average rate change for all coverages and forms
combined.
(B) For all
other filings, rate change information consists of:
(i) the average proposed rate change for each
applicable coverage or form;
(ii)
the total average rate change for all applicable coverages and forms
combined;
(iii) a six-year rate
change history; and
(iv) the effect
that changes in fee income have on the total average rate change for all
applicable coverages and forms combined.
(8) Historical premium and loss information.
This information consists of an insurer's most recent five-year experience, for
both Texas and countrywide, of direct premiums written, direct premiums earned,
direct losses and defense and cost containment expenses paid, direct losses and
defense and cost containment expenses incurred, and the ratio of the direct
losses and defense and cost containment expenses incurred to direct earned
premiums. The Texas experience is the amounts, or a subset of the amounts,
pertinent to the line of business reported on the Exhibit of Premiums and
Losses (Statutory Page 14 Data) in the insurer's Annual Statement. The
countrywide experience is the amounts, or a subset of the amounts, pertinent to
the line reported on the insurer's Insurance Expense Exhibit (IEE), Part III in
the insurer's Annual Statement.
(9)
Expense information. This information consists of Texas experience and, if
applicable, countrywide experience. The loss adjustment expenses must be shown
as a dollar amount and as a ratio to incurred losses. All other expenses must
be shown as a dollar amount and as a ratio to premium. All expense items must
be on a direct basis.
(A) Three years of
historical Texas experience must be included for commissions and brokerage
expenses incurred; taxes, licenses, and fees incurred; losses incurred; and
defense and cost containment expenses incurred. These must be the amounts, or a
subset of the amounts, reported on the Exhibit of Premiums and Losses
(Statutory Page 14 Data) in the insurer's Annual Statement.
(B) Three years of historical countrywide
experience must be included for commissions and brokerage expenses incurred,
other acquisition expenses incurred, general expenses incurred, losses
incurred, defense and cost containment expenses incurred, and adjusting and
other loss adjustment expenses incurred. These must be the amounts, or a subset
of the amounts, reported in the insurer's IEE, Part III in the insurer's Annual
Statement.
(C) Three years of
historical countrywide experience must be included for each category of
disallowed expenses. These must be the amounts reported in the insurer's
response to the annual TDI Disallowed Expense Call. Other acquisition and
general expenses, each adjusted to remove disallowed expenses, must be listed
separately. The total adjusted general expense percentage must reflect any
necessary adjustment due to the capping of general expenses at 110% of the
industry median for the line of insurance.
(D) To the extent that the expense provisions
differ from the historical expenses, the filing must provide additional support
for the expense provisions underlying the rates. Provisions for commissions and
brokerage expenses; other acquisition expenses; general expenses; taxes,
licenses, and fees; and profit and contingencies must be displayed and a sum
computed. For filings submitted under Insurance Code Chapter 2251, the expense
provisions must exclude disallowed expenses.
(E) When additional expense provisions are
included, such as the net cost of reinsurance or an expense offset from fee
income, the filing must include expected or historical experience. Support for
provisions for the net cost of reinsurance may include reinsurance premiums,
expected reinsurance recoverables, and a description of reinsurance coverage
including attachment points and limits.
(10) Loss cost information for reference
filings. This information consists of the following:
(A) the TDI file number or SERFF tracking
number of the loss costs being referenced;
(B) the derivation of the proposed loss cost
multiplier including any loss cost modification factor and the following
expense and profit provisions:
(i) commissions
and brokerage expenses;
(ii) other
acquisition expenses, adjusted to remove disallowed expenses;
(iii) general expenses, adjusted to remove
disallowed expenses;
(iv) taxes,
licenses, and fees; and
(v)
underwriting profit and contingencies;
(C) supporting documentation for loss cost
modification factors other than 1.00;
(D) the loss cost multiplier to be used as of
the effective date of the filing;
(E) the loss cost multiplier used immediately
before the effective date of the filing; and
(F) the effective rate-level change due to
any change in the loss cost multiplier.
(11) Profit provision information. This
information consists of a description of the methodology, assumptions, and
support for the assumptions used to arrive at the profit provisions underlying
the proposed rates.
(12) A
side-by-side comparison. This comparison must show any differences between the
previously filed and the proposed rates, rating manual, rules, or other
supplementary rating information.
(13) A mark-up. This is a copy of the
previously filed rates, rating manuals, rules, or other supplementary rating
information indicating the differences between it and the revised version, with
any new language or factors underlined and the deleted language or factors in
brackets with a strike through, or other clearly identified or highlighted
editorial notations referencing the new and replaced language or
factors.
(14) Sample premium
impacts by selected ZIP codes. These are sample premiums and premium changes
based on all changes included in a filing for certain specified policy types
and ZIP codes.
(15) Rate filing
templates. These are found in the Filings Made Easy Guide and provide insurers
with an optional means of providing certain supporting information and
supplementary rating information.
(16) Third-party data information. For each
third-party data set, this information consists of the following:
(A) the name of the data vendor or
source;
(B) a description of the
data, such as a data dictionary, that includes the name for each data element
and the corresponding definition;
(C) a description of how the data is used in
ratemaking or otherwise used to determine rates or premiums; and
(D) a list of the rating variables that
reflect use of the data.
(17) Third-party model information. For each
third-party model, this information consists of the following:
(A) the name of the model vendor or
source;
(B) the model name and
version number;
(C) a description
of the model;
(D) a description of
the model input;
(E) a description
of how the model output is used in ratemaking or otherwise used to determine
rates or premiums; and
(F) a list
of the rating variables that depend on the output of the model.
(18) Other information. This
includes any other information required by the Commissioner necessary to
determine that the rates meet the rate standards.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.