CHAPTER Ins 2800 PROPERTY AND
CASUALTY RATE AND SUPPLEMENTARY INFORMATION FILINGS
Statutory Authority: RSA
400-A:15,
PART Ins 2801 ADVISORY
ORGANIZATION
Ins 2801.01 Purpose,
Applicability and Scope.
(a) The purpose of this chapter
is to set forth rules and procedural requirements which the commissioner deems
necessary to carry out the provisions of RSA 412:16 II., III., V., VI.; RSA
412:23 and RSA 412:25 as to rate and supporting information filings of property
and casualty insurers that adopt and incorporate in whole or in part approved
prospective loss costs filings made
by advisory organizations.
(b) Nothing in this chapter shall be construed to
require insurers, advisory organizations or their participating insurers to change
the current manner in which supplementary rating information is filed.
(c) Nothing in this chapter shall be construed to
require advisory organizations or their participating insurers to immediately
refile rates or premium charges in effect.
(d) This chapter shall apply to the type of
insurance described in RSA 412 and to insurers making filings under RSA 412:16.
Source. #5655, eff 7-1-93; ss by #6984, eff 5-1-99;
ss by #8936, eff 8-1-07; ss by #10920, eff 9-1-15
Ins 2801.02 Definitions.
(a) “Advisory organization” means an organization
defined pursuant to RSA 412:3 II.
(b) “Expenses” means that portion of a rate
attributable to commission expense and other acquisition costs, field
supervision costs, collection costs, general administrative costs, taxes,
licenses, and fees.
(c) “Expense constant” means an additive
component of a rate that is used to recognize a minimum cost associated with a
policy regardless of its size.
(d) “Fixed expense” means a cost the value of
which is independent of the size of the policy.
(e) "Investment
income" means income derived from the insurer's invested assets attributed
to policyholder supplied funds.
(f) “Loss cost multiplier” means a multiplicative
factor applied to a prospective loss cost to develop a rate.
(g) "Prospective loss costs" means that
portion of a rate that excludes profit and expenses except for loss adjustment
expenses and is based on historical
aggregate losses and loss adjustment expenses.
(h) "Rate" means the cost of insurance
per exposure unit, prior to any application of individual risk variations based
on loss or expense considerations. The
term does not include minimum premiums.
(i) “Reference filing” as used in this chapter,
means an advisory organization’s filing of prospective loss costs as defined in
(g) above that insurers can adopt and incorporate in whole or in part in
support of their own filings.
(j) "Supplementary rating information"
means any manual, minimum premium, rating schedule or plan of policy writing
rules, rating rules, classification system, territory codes and descriptions,
rating plans, and any other similar information needed to determine the
applicable premium for an insured.
(k) "Underwriting contingencies" means
the provisions included in the rate to account for risk exposure not foreseen
as part of the development of expected loss or expense.
(l) "Underwriting profit" means the
difference between the premium an insurer collects and the expected level of total
losses, loss expenses and all other expenses.
(m) A “variable expense” means a cost the value
of which is dependent on the size of the policy.
Source. #5655, eff 7-1-93; ss by #6984, eff 5-1-99;
ss by #8936, eff 8-1-07; ss by #10920, eff 9-1-15
Ins 2801.03 Advisory Organization Reference Filing of Advisory Prospective Loss Costs.
(a) Advisory organizations may develop and make
reference filings containing advisory prospective loss costs. Such filing shall
contain the statistical data and support for any calculations or assumptions
underlying those prospective loss costs.
The reference filings shall be filed and approved by the commissioner
pursuant to the provisions of RSA 412:16 I, and in accordance with the provisions
of RSA 412:15, RSA 412:19, RSA 412:23 and RSA 412:25.
(b) An insurer may adopt a referenced filing by:
(1) Becoming a
participating insurer of the licensed advisory organization which made the
reference filing of advisory prospective loss costs; and
(2) Filing with the commissioner the information
required on form RFF-1.
(c) The insurer's rates shall be the approved
prospective loss costs filed by the rating organization which have been put into
effect in accordance with the provisions of paragraph (a), combined with the
insurer’s loss cost adjustments which are filed in form RFF-1 and approved by
the commissioner pursuant to the provisions of RSA 412:16, and in accordance
with the provisions of RSA 412:15 and RSA 412:19.
(d) To the extent that
an insurer’s final rates are determined solely by applying its loss cost
adjustments, as presented in the reference filing adoption form, to the
prospective loss costs contained in an advisory organization’s reference filing
and printed in the advisory organization’s rating manual, the insurer shall not
be required to develop or file its final rate pages with the commissioner. If an insurer chooses to print and distribute
final rate pages for its own use, based solely upon the application of its
filed loss costs adjustments to an advisory organization’s prospective loss
costs, the insurer shall not be required to file those pages with the
commissioner. If the advisory
organization does not print the loss costs in its rating manual, the insurer
shall submit its rates to the commissioner.
Source. #5655, eff 7-1-93; ss by #6984, eff 5-1-99;
ss by #8936, eff 8-1-07; ss by#10920, eff 9-1-15
Ins 2801.04 Required
Filing Documents. Each
insurer filing to adopt an advisory organization approved prospective loss cost
reference filing shall include a completed copy of the reference filing
adoption form RFF-1. Each insurer filing
to revise the loss cost multiplier in effect shall likewise include a completed
copy of the reference filing adoption form RFF-1.
Source. #5655, eff 7-1-93; ss by #6984, eff 5-1-99;
ss by #8936, eff 8-1-07; ss by#10920, eff 9-1-15
Ins 2801.05 Underwriting and
Rating Documentation. Companies writing insurance in this state
shall maintain all underwriting and rating documentation from which any premium
charge is developed. Premium supporting
records may be in physical, fiche or electronic format provided that these
records are identical to the source document.
Premium supporting records shall not be a summarization of facts and
information from the source document from which they are made.
Source. #5655, eff 7-1-93; ss by #6984, eff 5-1-99;
ss by #8936, eff 8-1-07; ss by#10920, eff 9-1-15
Ins 2801.06 Instructions for
the Completion of Form RFF-1.
(a) On form RFF-1, the insurer shall supply the
following information:
(1) Insurer name and address, including the name
of the person responsible for filing, his/her title and telephone number and
the date of the filing;
(2) The National Association of Insurance
Commissioner's identification number assigned to the insurer, and to the
insurer’s group;
(3) The line of insurance to which the form
applies;
(4) The name of the advisory organization;
(5) The filing reference number assigned to the
approved prospective loss costs filing by the advisory organization, and that
it files to be deemed to have independently submitted as its own filing the
prospective loss costs in the captioned referenced filing;
(6) A declaration that the insurer is a member,
subscriber or service purchaser of the named advisory organization for the line
of insurance identified in (a) (3) above;
(7) The proposed percentage rate level change and
effective date;
(8) The prior percentage rate level change and
effective date;
(9) A declaration that the insurer will:
a. Either file to have its loss cost multipliers
and, if utilized, expense constants be applicable to future revisions of the
advisory organization's prospective loss costs for this line of insurance as
identified in (a)(3) above, so that:
1. The insurer’s rates will be the combination
of the advisory organization’s prospective loss costs and the insurer’s loss
cost multipliers and, if utilized, expense constants specified in the
attachments;
2. The rates will apply to policies written or
after the effective date of the advisory organization’s prospective loss costs;
and
3. Authorization is effective until disapproved
by the commissioner, or amended or withdrawn by the insurer; or
b. File to have its loss cost multipliers and,
if utilized, expense constants be applicable only to the advisory organization
reference filing identified in (a)(5) above.
(b) The following information shall be supplied
if an expense constant is not used:
(1) The line of
insurance, the subline of insurance, the coverage, the territory and the
classification the form will apply to;
(2) A declaration that the insurer will adopt the
loss costs filing referenced in the adoption form:
a. Without modification; or
b. With modification, but if the filing is adopted
with modification, the nature, percent, rationale and supporting data shall be
cited;
(3) The loss cost modification expressed as a
multiplicative factor;
(4) The total production expense expressed as a
percentage of premium;
(5) The general expense expressed as a percentage
of premium;
(6) The taxes, licenses and fees expressed as a
percentage of premium;
(7) The underwriting profit and contingencies
expressed as a percentage of premium;
(8) The offset for investment income expressed as
a percentage of premium;
(9) The other expenses expressed as a percentage
of premium;
(10) The total expenses, which shall be the sum of
(4) above through (9) above, expressed as a percentage of premium;
(11) The expected loss ratio expressed in decimal
form;
(12) The insurer’s calculated loss cost
multiplier, which shall equal 1.00 divided by (b)(11) above;
(13) The insurer's selected loss cost multiplier
which shall equal the modification in (b)(3) above divided by the insurer’s
calculated lost cost multiplier in (b)(12); and
(14) The rate level change for the coverages that
apply.
(c) The following information shall be supplied
if an expense constant is used:
(1) The line of
insurance, the subline of insurance, the coverage, the territory and the
classification the form will apply to;
(2) A declaration that the insurer will adopt the
loss costs filing referenced in the adoption form:
a. Without modification; or
b. With modification, but if the filing is
adopted with modification, the nature, percent, rationale and supporting data
shall be cited;
(3) The loss cost modification expressed as a
multiplicative factor;
(4) An explanation of how expenses are split
between fixed and variable;
(5) The total production expense expressed as a
percentage of premium and a breakdown of the expense between fixed and variable
expense;
(6) The general expense expressed as a percentage
of premium and a breakdown of the expense between fixed and variable expense;
(7) The taxes, licenses and fees expressed as a
percentage of premium and a breakdown of the expense between fixed and variable
expense;
(8) The underwriting
profit and contingencies expressed as a percentage of premium and a breakdown
of the expense between fixed and variable expense;
(9) The offset for investment income expressed as
a percentage of premium;
(10) The other expenses expressed as a percentage
of premium and a breakdown of the expense between fixed and variable expense;
(11) The total expense,
which shall be the sum of (5) through (10) above, expressed as a percentage of
premium and a breakdown of the expense between fixed and variable expense;
(12) The expected loss ratio expressed in decimal
form;
(13) The variable expense loss ratio expressed in
decimal form;
(14) The formula expense constant calculated as
follows:
a. The reciprocal of (c) (12) less the
reciprocal of (c) (13);
b. The result of a. above times the average
underlying loss costs;
(15) The selected expense constant;
(16) The formula variable loss cost multiplier,
which shall be 1.00 divided by (c)(13) above;
(17) The selected variable loss cost multiplier
which shall equal the modification in (c)(3) above divided by the insurer’s
formula variable loss cost multiplier in (c)(16);
(18) An explanation of any differences between
(14) above and (15) above; and
(19) The rate level change for the coverages that
apply.
Source. #5655, eff 7-1-93; ss by #6984, eff 5-1-99;
ss by #8936, eff 8-1-07l; ss by #10920, eff 9-1-15
FORM
RFF-1
Date:
PROSPECTIVE
LOSS COSTS REFERENCE
FILING
ADOPTION FORM
1.
INSURER NAME
_____________________________________________________________________
ADDRESS
_______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
PERSON
RESPONSIBLE FOR FILING ________________________________________________
TITLE
______________________TELEPHONE # ________________________________________
2.
NAIC COMPANY # ________________________
NAIC GROUP #_____________________________
3.
LINE OF INSURANCE
_________________________________________________________________
4.
ADVISORY ORGANIZATION
___________________________________________________________
5.
ADVISORY ORGANIZATION REFERENCE FILING #
_______________________________________
6.
The above insurer hereby declares that it is a member, subscriber or service
purchaser of the named advisory organization for this line of insurance. The
insurer hereby files to be deemed to have independently submitted as its own
filing the prospective loss costs in the captioned reference filing.
The
insurer's rates will be the combination of the prospective loss costs and the
loss cost multipliers and, if utilized, the expense constants specified in the
attachments.
7.
PROPOSED RATE LEVEL CHANGE ____% EFFECTIVE
DATE ___________________
8.
PRIOR RATE LEVEL CHANGE ____% EFFECTIVE
DATE ________________________________
9.
CHECK ONE OF THE FOLLOWING:
______The
insurer hereby files to have its loss cost multipliers and, if utilized,
expense constants be applicable to future revisions of the advisory
organization's prospective loss costs for this line of insurance. The insurer's
rates will be the combination of the advisory organization's prospective loss
costs and the insurer's loss cost multipliers and, if utilized, expense
constants specified in the attachments. The rates will apply to policies
written on or after the effective date of the advisory organization's
prospective loss costs. This authorization is effective until disapproved by
the commissioner, or amended or withdrawn by the insurer.
______The
insurer hereby files to have its loss costs multipliers and, if utilized,
expense constants be applicable only to the above advisory organization
reference filing.
I.
CALCULATION OF COMPANY LOSS COST MULTIPLIER WITHOUT EXPENSE CONSTANT
1.
Line, subline, coverage, territory, class, etc. combination to which this page
applies _____________
________________________________________________________________________________________
2.
Loss Cost Modification:
A.
The insurer hereby files to adopt the prospective loss costs in the captioned
reference filing:
Without
modification. (factor=1.000)
With
the following modification: _________%
(Cite
the nature of the modification, and
attached supporting data and rationale.)
_________________________________________________________________________
_________________________________________________________________________
B.
Loss Cost Modification Expressed as a Factor: __________
3. Development of Expected Loss Ratio. (Attach
exhibit detailing insurer expense data and/or other supporting information.
Selected Provisions
A.
Total Production Expense ______________%
(+)
B.
General Expense ______________%
(+)
C.
Taxes, Licenses & Fees ______________%
(+)
D.
Underwriting Profit & Contingencies ______________%
(+)
E.
Investment Income ______________%
(-)
F.
Other (explain) ______________%
(+)
G.
TOTAL ______________%
4.
A. Expected Loss Ratio: ELR:ELR=100%-
3G ______________%
B.
ELR in decimal form = ______________
5. Calculated Loss Cost Multiplier (1.00/4B)= ______________%
6. Company Selected Loss Cost Multiplier = ______________
Any
difference between 5 and 6 should be explained on line 2.
7. Rate level change for the coverages to which
this
page applies. _____________%
II. CALCULATION OF COMPANY LOSS COST MULTIPLIER
WITH EXPENSE CONSTANTS
1.
Line, subline, coverage, territory, class, etc. combination to which this page
applies __________
_____________________________________________________________________________________
2. Loss Cost Modification:
A.
The insurer hereby files to adopt the prospective loss costs in the captioned
reference filing:
Without modification.
(factor=1.000)
With the following modification: _________%
(Cite
the nature of the modification, and
attached supporting data and rationale.)
_________________________________________________________________________
_________________________________________________________________________
B.
Loss Cost Modification Expressed as a Factor:
____________________________________
3. Development of Expected Loss Ratio. (Attach
exhibit detailing insurer expense data and/or other supporting information,
including an explanation of the split between fixed and variable expenses.)
Selected
Provisions
Overall Variable Fixed
A.
Total Production Expense _______ _______ ________(+)
B.
General Expense _______ _______ ________(+)
C.
Taxes, Licenses & Fees _______ _______ ________(+)
D.
Underwriting Profit & Contingencies _______ _______ ________(+)
E.
Investment Income _______ _______ ________(-)
F.
Other (explain) _______ _______ ________(+)
G.
TOTAL _______ _______ _________
4.
A. Expected Loss Ratio (ELR): 100%
- Overall 3G. = _________
B.
ELR in decimal form = _________
C.
Variable Expected Loss Ratio (VELR): 100%-Variable 3.G= _________
D.
VELR in decimal form = _________
5.
A. Formula Expense Constant
(1.00/4B-1.00/4D)
x Average Underlying Loss Cost = _________
B.
Formula Variable Loss Cost Multiplier: (I.2.B ÷ III.2.D) = _________
C.
Selected Expense Constant = _________
6.
A. Formula Variable Loss Cost
Multiplier: (1.00/4D)= _________
B.
Selected Variable Loss Cost Multiplier (2B/6A) = _________
7.
Explain any differences between 5A and 5B.
Any
difference between 6A and 6B should be explained on line 2. ________________________________________________________________________________
8.
Rate level change for the coverages to which this page applies: ________%
APPENDIX
Rule
|
Statute
|
|
|
Ins 2801.01 |
RSA 412:16, II., III.,
VI.; 412:43; 412:25 |
Ins 2801.02 |
RSA 412:20 |
Ins 2801.03 |
RSA 412:6; 412:15;
412:19; 412:23; 412:25 |
Ins 2801.04 |
RSA 412:15; 412:16 |
Ins 2801.05 |
RSA 412:16 |
Ins 2801.06 |
RSA 412:16 |