Ala. Admin. Code r. 482-1-117-.18
Current through Register Vol. 43, No. 1, October 31, 2024
Section 482-1-117-.18 - Use Of Rates(1) Use of Maximum Rates. An insurer that files rates or has rates on file that are equivalent to the maximum rates promulgated by the Superintendent may use those rates without further proof of their reasonableness.(2) Use of Rates Higher Than Maximum Rates. In accordance with the rules adopted by the Superintendent, an insurer may file for approval of and use rates for credit disability insurance that are higher than the maximum rates promulgated by the Superintendent, as long as the benefits provided by the policy is reasonable in relation to the rate requested. This requirement is satisfied if the premium rate charged develops or may reasonably be expected to develop a loss ratio that affords a reasonable allowance for actual and expected loss experience, general and administrative expenses, reasonable creditor compensation, investment income, the manner in which premiums are charged and other acquisition costs, reserves, taxes, regulatory license fees and fund assessments, reasonable insurer profit and other relevant actuarial data.(3) A filing for approval of rates higher than the maximum rate promulgated by the Superintendent shall specify the account or accounts to which the rates apply. The rates may be applied in any one of the following ways: (a) Uniformly to all accounts of the insurer.(b) On an equitable basis approved by the Commissioner to only one or more accounts of the insurer for which the experience has been less favorable than expected.(c) According to a case-rating procedure on file with the Commissioner.(4) Approval Period of Deviated Rates. (a) A deviated rate will be in effect for a period of time not longer than the experience period used to establish the rate (i.e. one year, two years or three years). An insurer may file for a new rate before the end of a rate period, but not more often than once during any twelve-month period.(b) A deviated rate approved in accordance with this Paragraph (4) may be used only by the insurer filing the rate. If an account changes insurers, the rate approved to be used for the account by the prior insurer may not be used by the succeeding insurer.(c) The approval of any deviated rate issued prior to the effective date of this chapter is hereby amended to be subject to the limitations set forth in this Paragraph (4). Notwithstanding this amendment, any previously approved deviated rate may continue to be used for a period of one hundred eighty (180) days following the effective date of this chapter, unless the previous approval was due to expire prior to the 180 day period.(5) Use of Rates Lower than Filed Rates. An insurer may at any time use a rate for an account that is lower than its filed rate without notice to the Commissioner.(6) As used in this rule, the following terms shall have the following meanings:(a) Experience. "Earned premiums" and "incurred losses" during the experience period.(b) Experience period. The most recent period of time for which earned premiums and incurred losses are reported, but not for a period longer than three (3) full years.(c) Incurred losses. Total claims paid during the experience period, adjusted for the change in claim reserve. Author: Reyn Norman, Associate Counsel
Ala. Admin. Code r. 482-1-117-.18
New Rule: October 14, 1999; effective November 1, 1999. Filed for codification in the Alabama Administrative Code by the Department of Insurance on January 17, 2003, pursuant to the Code of Ala. 1975, § 27-7-43.Statutory Authority:Code of Ala. 1975, § 27-2-17.