Utah Admin. Code R590-225-8 - Procedures for Rate and Supplementary Information Filings

Current through Bulletin No. 2021-18, September 15, 2021

(1) Rates and supplementary information in general.
(a) Rates and supplementary information are "Use And File" filings. EXCEPTION: title and workers compensation rates and supplementary information are "File Before Use" filings.
(b) Service contract providers, bail bond agencies, and guaranteed asset protection providers are exempt from this section.
(c) All rate filings for private passenger auto, homeowners, or workers compensation type of insurance must include a certification signed by a qualified actuary stating that the rates are not inadequate, excessive, or unfairly discriminatory as required by Subsection 31A-19a-201(1).
(2) If you have authorized a Rate Service Organization (RSO) to make a prospective loss cost, supplementary information filing, or both, on your behalf, no filing by you is required if you implement the filing as submitted by the RSO.
(a) A filing is required if you delay the effective date, non-adopt, or alter the filing in any way.
(b) Any such filing must be received by the department within 30 days of the effective date established by the RSO.
(c) We do not require that you attach copies of the RSO's manual pages when you reference an RSO filing.
(3) If you have NOT authorized an RSO to file the prospective loss cost, supplementary rating information, or both, on your behalf
(a) you must include in your filing a letter stating your intent to adopt the RSO prospective loss cost, supplementary rating information filing, or both.
(b) You must file copies of any manual pages as if they were your own and provide your actuarial justification.
(4) A "Me Too" filing, referencing a filing submitted by another licensee, is not permitted.
(5) If the filing is for more than one insurer and all insurers included in the filing have submitted a transmittal and the supporting data and manual pages are identical for each insurer included in the filing, only one copy of the supporting data and manual pages are required to be submitted.
(6) Rate and supplementary information filings must be supported and justified by each insurer.
(a) Justification must include:
(i) submission of all factors used in determining initial supplementary information and rates or changes in existing supplementary information and rates; and
(ii) a complete explanation as to the extent to which each factor has been used.
(b) Underwriting criteria are not required unless they directly affect the rating of the policy.
(c) Underwriting criteria used to differentiate between rating tiers is required.
(7) When submitting a filing for any kind of rating plan, rating modification plan, or credit and debit plan, an insurer must include in the filing:
(a) a statement identifying the arithmetic process to be used and whether factors will be added or multiplied when applying them to base rates; and
(b) justification for the method used.
(c) A filing will be rejected as incomplete if it fails to specifically provide this information.
(8) Utah and countrywide statistical data for the latest three years available must be submitted with each filing.
(a) This data should include earned premiums, incurred losses, loss ratios, establishment of expense factors, and expected loss ratios.
(b) Calculations involved in establishing rates from loss experience are to be exhibited including the establishment of trend factors, loss development factors, etc.
(c) If any of the above information is not available, a detailed explanation of why must be provided with the filing.
(9) Prospective loss cost and loss cost multiplier.
(a) Loss cost multiplier.
(i) An individual insurer adjustment to the RSO prospective loss cost must be made as part of the calculation of the loss cost multiplier and must be included in the "Utah Insurer Loss Cost Multiplier Filing Forms."
(ii) This form allows for the inclusion of an individual insurer modification of the RSO prospective loss cost.
(10) Procedures for Reference Filings to Advisory Prospective Loss Cost.
(a) An RSO does not usually file an advisory rate that contains provisions for expenses, other than loss adjustment expenses.
(i) An RSO develops and files with the commissioner a "Reference Filing" containing advisory prospective loss cost and supporting actuarial and statistical data.
(ii) Each insurer must individually determine the rates it will file and the effective date of any rate changes.
(b) If an insurer that is a member, subscriber or service purchaser of any RSO determines to use the prospective loss cost in an RSO Reference Filing in support of its own filing, the insurer must make a filing using the "Utah Insurer Loss Cost Multiplier Filing Forms."
(c) The insurer's filed rates are the combination of the RSO's prospective loss cost and the loss cost multiplier contained in the "Utah Insurer Loss Cost Multiplier Filing Forms."
(d) An insurer may file a modification of the prospective loss cost in the RSO Reference Filing based on its own anticipated experience.
(e) Actuarial justification is required for a modification, upwards or downwards, of the prospective loss cost in the Reference Filing.
(f) An insurer may request to have its loss cost adjustments remain on file and reference all subsequent RSO prospective loss cost Reference Filings.
(i) Upon receipt of subsequent RSO Reference Filings, the insurer's filed rates are the combination of the RSO's prospective loss cost and the loss cost adjustments contained in the "Utah Insurer Loss Cost Multiplier Filing Forms" on file with the commissioner, and will be effective on the effective date of the prospective loss cost.
(ii) The insurer need not file anything further with the commissioner.
(g) If the filer wants to have its filed loss cost adjustments remain on file with the commissioner, but intends to delay, modify, or not adopt a particular RSO's Reference Filing, the filer must make an appropriate filing with the commissioner.
(h) An insurer's filed loss cost adjustments will remain in effect until the filer withdraws them or files a revised "Utah Insurer Loss Cost Multiplier Filing Form."
(i) A filer may file such other information the filer deems relevant.
(j) If an insurer wishes to use minimum premiums, it must file the minimum premiums it proposes to use.
(11) Supplementary Rate Information.
(a) The RSO files with the commissioner RSO filings containing a revision of rules, relativities and supplementary rate information. These RSO filings include:
(i) policy-writing rules;
(ii) rating plans;
(iii) classification codes and descriptions; and
(iv) territory codes, descriptions, and rules, which include factors or relativities such as, increased limits factors, classification relativities or similar factors.
(b) These filings are made by the RSO on behalf of those insurers that have authorized the RSO to file rules, relativities and supplementary rating information on their behalf.
(c) An RSO may print and distribute a manual of rules, relativities and supplementary rating information.
(d) If an insurer has authorized an RSO to file on its behalf and the insurer decides to use the revisions and effective date then the insurer does NOT file anything with the commissioner.
(e) If an insurer has authorized an RSO to file on its behalf and the insurer decides to use the revisions as filed, BUT with a different effective date, then the insurer must notify the commissioner of the insurer's effective date within 30 days after the RSO's effective date.
(f) If an insurer has authorized an RSO to file on its behalf, but the insurer decides not to use the revision, then the insurer must notify the commissioner within 30-days after the RSO's effective date.
(g) If an insurer has authorized an RSO to file on its behalf, but the insurer decides to use the revision with modification, then within 30-days of the RSO's effective date the insurer must file the modification specifying the basis for the modification and the insurer's effective date.
(12) Consent-to-rate Filing.
(a) Subsection 31A-19a-203(6) allows an insurer to file a written application for a particular risk stating the insurer's reasons for using a higher rate than that otherwise applicable to a risk.
(b) The Filing Description must indicate that it is a consent-to-rate filing, show the filed rate, the proposed rate, and the reasons for the difference.
(13) Individual Risk Filing.
(a) R590-127, "Rate Filing Exemptions", provides for those circumstances when an Individual Risk filing is permitted.
(b) An individual risk filing must be filed with the commissioner.
(i) The filing shall consist of a copy of the Declarations Page, copies of any pertinent coverage forms and rating schedules, and premium development.
(ii) The Filing Description must indicate that it is an individual risk filing, and contain the underwriter's explanation for the filing.
(14) Information Regarding Dividend Plan.
(a) Sections 31A-19a-210 and 31A-21-310 allow for dividend distributions.
(b) A plan or schedule for the distribution of a dividend developed AFTER THE INCEPTION of a policy is NOT considered a rating plan and does not have to be filed according to the provisions of this rule.
(c) A plan or schedule for the distribution of a dividend applicable to an insurance policy FROM ITS INCEPTION are required to be filed pursuant to Section 31A-21-310.
(15) The Utah Insurance Code allows tiered rating plans within one insurer or insurer group with common ownership.
(a) A filing must show that the tiers are based on mutually exclusive underwriting rules, which are based on clear, objective criteria that would lead to a logical distinguishing of potential risk.
(b) A filing must provide supporting information that shows a clear distinction between the expected losses and expenses for each tier.
(c) If an insurer group is using a tiered rating structure, the group of insurers cannot all file the same loss cost multiplier and then file standard percentage deviations.
(i) A difference must be demonstrated in the loss cost multiplier formula, either as a modification of the RSO prospective loss cost or in the insurer expense factor.
(ii) An individual insurer adjustment or modification must be supported by actuarial data which establishes a reasonable standard for measuring probable insurer variations in historical or prospective experience, underwriting standards, expense and profit factors.

Notes

Utah Admin. Code R590-225-8
Amended by Utah State Bulletin Number 2018-1, effective 12/8/2017

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