Insurance 2800

CHAPTER Ins 2800 PROPERTY AND CASUALTY RATE AND SUPPLEMENTARY INFORMATION FILINGS

Statutory Authority: RSA 400-A:15, I.; RSA 412:43

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; ss by #14510, eff 2-7-26, EXPIRES: 2-7-36

Ins 2801.02 Definitions.

(a) “Advisory organization” means “advisory organization” as defined in RSA 412:3, II.

(b) “Expenses” means “expenses” as defined in RSA 412:3, VIII.

(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 “rate” as defined in RSA 412:3, XVIII.

(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 “supplementary rating information” as defined in RSA 412:3, XXII.

(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; ss by #14510, eff 2-7-26, EXPIRES: 2-7-36

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 reference adoption form RFF-1, as available in Appendix A.

(c) The insurer's rates shall be the approved prospective loss costs filed by the advisory 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 form RFF-1, 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; ss by #14510, eff 2-7-26, EXPIRES: 2-7-36

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 form RFF-1. Each insurer filing to revise the loss cost multiplier in effect shall likewise include a completed copy of 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; ss by #14510, eff 2-7-26, EXPIRES: 2-7-36

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 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; ss by #14510, eff 2-7-26, EXPIRES: 2-7-36

Ins 2801.06 Instructions for the Completion of Form RFF-1.

(a) On form RFF-1, as available in Appendix A, the insurer shall supply the following information:

(1) Insurer name and address, including the name of the person responsible for filing, their 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 the insurer 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 on 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.

(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 8-1-07; ss by #10920, eff 9-1-15; ss by #14510, eff 2-7-26, EXPIRES: 2-7-36

Ins 2801.07 Waiver of Rules.

(a) The commissioner, upon the commissioner’s own initiative or upon request by an insurer, shall waive any requirement of this part if such waiver does not contradict the objective or intent of the rule and:

(1) Applying the rule provision would cause confusion or would be misleading to consumers;

(2) The rule provision is in whole or in part inapplicable to the given circumstances;

(3) There are specific circumstances unique to the situation such that strict compliance with the rule would be onerous without promoting the objective or intent of the rule provision; or

(4) Any other similar extenuating circumstances exist such that application of an alternative standard or procedure better promotes the objective or intent of the rule provision.

(b) No requirement prescribed by statute shall be waived unless expressly authorized by law.

(d) A request for a waiver shall specify the basis for the waiver and proposed alternative, if any.

Source. #14510, eff 2-7-26, EXPIRES: 2-7-36

APPENDIX A

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 ________________________________________________________________________________

8. Rate level change for the coverages to which this page applies: ________%

APPENDIX B

Rule	Statute
Ins 2801.01	RSA 412:16, II, III, VI; RSA 412:25; RSA 412:43
Ins 2801.02	RSA 412:20
Ins 2801.03	RSA 412:15; RSA 412:16; RSA 412:19; RSA 412:23; RSA 412:25
Ins 2801.04	RSA 412:15; RSA 412:16
Ins 2801.05	RSA 412:16
Ins 2801.06	RSA 412:16
Ins 2801.07	RSA 400-A:15, I; RSA 541-A:22, IV