054.00.96 Ark. Code R. 003

Current through Register Vol. 49, No. 10, October, 2024

Rule 054.00.96-003 - Property, Casualty, Surety and Marine Rate and Form Filings - Reg. 23

Section 1. Purpose

The purpose of this Rule is to set forth rules and procedural requirements which the Commissioner deems necessary to carry out the provisions of Ark. Code Ann. §§ 23-67-201, et seq., § 23-57-219, § 23-79-109 and § 23-79-110, as to rate and form filings of property, casualty, surety, and marine insurers.

Section 2. Authority

This Rule is issued pursuant to the authority vested in the Commissioner by Ark. Code Ann. § 23-61-108, §§ 25-15-202 et seq., § 23-67-218, and other applicable provisions of Arkansas law.

Section 3. Applicability and Scope

This Rule applies to insurance described in Ark. Code Ann. § 23-67-203, and insurers, rate service or advisory organizations, joint underwriting associations and joint reinsurance organizations making filings under Ark. Code Ann. §§ 23-67-201, et seq., § 23-67-219 and § 23-79-109, subject to any exemptions the Commissioner may order pursuant to Ark. Code Ann. § 23-67-206.

Section 4. Effective Date

Prospective loss costs means that portion of a rate that does not include provisions for expenses (other than loss adjustment expenses) or profit, and are based on historical aggregate losses and loss adjustment expenses adjusted through development to their ultimate value and projected through trending to a future point in time.

H. Participating Insurer.

Participating insurer means any member, subscriber or service purchaser of an advisory organization.

Section 6. Rate Service Organizations

A. Advisory Organizations - Permitted Activity.

Every advisory organization shall file with the Department every advisory document thirty (30) days prior to the effective date. The Department may extend the review period an additional thirty "(30) days by written notice to the filer before the thirty (30) day period expires. Any advisory organization, in addition to other activities permitted, is authorized to:

1. Prepare and distribute rates, supplementary rate information and supporting information in accordance with Ark. Code Ann. § 23-67-216 and § 23-67-219; however, such filings are for advisory purposes only and shall not be made on behalf of any insurer.

2. Prepare and file on behalf of members and subscribers, policy forms and endorsements and consult with members, subscribers and others relative to their use and application.

3. An advisory organization may develop and make reference filings containing advisory prospective loss costs in accordance with Ark. Code Ann. § 23-67-216. Such filings shall contain the statistical data and supporting information for any calculations or assumptions underlying those prospective loss costs.

4. Final rates for residual markets may be prepared and filed by the Plan Administrator as directed by the Department.

B. Advisory Organizations - Prohibited Activity.

1. An advisory organization cannot file any plan of rates or supplementary rate information on behalf of an insurer.

2. An advisory organization cannot file, distribute or compile recommendations relating to rates that include expenses (other than loss adjustment expenses) or profit except in the lines of insurance as may be designated by the Commissioner. An advisory organization may, however, provide insurers with an annual study of aggregate average expense data and investment income.

Section 7. Procedures for Rate and Supplementary Rate Information Filings

2. Supporting Information Required to Supplement the Filing.

a. Each rate and rule filing submitted shall be accompanied by the Rate Filing Abstract (Form RF-1). If you are making a loss cost reference filing see Section 7(A)(3). Rate and rule filings for Homeowners Insurance and Private Passenger Automobile Insurance must also include the Private Passenger Automobile Abstract (Form A-l), Survey Form APCS or Homeowners Abstract (Form H-l) and Survey Form HPCS. Rate and form filings must be made separately. (See Section 8, Procedures for Form Filings, below). The following required documentation should be identified as an exhibit in the filing, and the exhibits should be numbered to correspond directly with the listing of documentation. If an item required is not available or is inapplicable, a statement should be included that specifies the inapplicability or unavailability of the particular item.

b. Explain the type of loss information utilized in this rate filing. Specify whether the data reflects a calendar period, accident period, or policy period.

(1) If calendar period information is used, explain any adjustments that have been made to reflect changes in those estimated loss liabilities based on actual claims, and changes in incurred but not reported estimated loss liabilities. If a provision for incurred but not reported estimated loss liabilities is included, specify the calculation changes over the experience period, and the distribution among coverages and states. Loss development factors should be shown by coverage both for Arkansas and countrywide for the past five (5) years.

(2) If*policy or accident period data is used, explain any tests or adjustments that were made to loss development factors so as to make them appropriate for use in this filing. Loss development factors should be shown by coverage both for Arkansas and countrywide for the past five (5) years.

c. If the methods used in this filing differ from those used in the insurer's last rate filing for this coverage in Arkansas, or if the Arkansas methods differ from those used countrywide, attach an explanation of the differences.

d. Explain any adjustments for large or catastrophic losses that were made in the statistical information on losses.

e. Display the calculation of the estimate of investment income on net unearned premiums and loss reserves.

f. Display the calculation of any loading or contingency factor which is used in this filing.

g. Display underwriting expenses. State procedures used in the filing to recognize the distinction between expenses which vary directly with losses, and expenses such as general expenses, which do not vary. company's loss cost adjustments.

(3) Pay the appropriate fees.

(4) Indicate the insurer's proposed effective date.

b. Upon subsequent revision by an advisory organization of a loss cost filing, an insurer having requested to have its loss cost adjustment applicable to subsequent filings must:

(1) Give notice of its intent to adapt by submitting a cover letter so stating and provide the advisory organization's reference document number.

(2) Fay the appropriate fees.

(3) Provide a copy of the previously filed RF-2 indicating that the loss cost modifier will be applicable to future filings.

c. If an insurer who has filed to have its loss cost adjustments remain on file with the Department intends to delay, modify, or not adopt a particular advisory organization's loss cost reference -filing, the insurer must notify the Department in writing. The insurer's on-file loss cost adjustments will remain in effect until disapproved by the Department,withdrawn by the insurer or until the insurer files and receives approval of a revised Form RF-2.

d. To the extent that an insurer's final rates are determined solely by applying its loss cost adjustments to the prospective loss costs contained in an advisory organization's reference filing, the insured need not develop or file its final rate pages with the Department. If an insurer chooses to print and distribute final rate pages for its own use, based solely upon the application of its filed loss cost adjustments to an advisory organization's prospective loss costs, the insurer must file those pages with the Department. If the advisory organization does not print the loss' costs in its rating manual, the insurer must submit its rates to the Department.

e. Nothing in these procedures shall be construed to require advisory organizations or their participating insurers to immediately refile rates previously implemented. Any participating insurer of an advisory organization is authorized to continue to use all rates and deviations filed for its use until disapproved, or the insurer makes its own filing, or files Form RF-2 adopting the advisory organisation's prospective loss costs or a modification thereof.

B. Procedures for Rate and Supplementary Rate Information Filings. For Workers' Compensation and Employers' Liability Insurance.

Manuals of classifications, rules and rates, rating plans, and every modification of any of the foregoing which an insurer proposes to use for workers' compensation and employers' liability insurance must be approved or deemed approved by this Department before such manual, rules and rates or rating plan can be used. Insurers may file independently or by reference to the loss costs, supporting information or supplementary rate information filed by an advisory organization. Insurers may file deviations to the loss costs filed by an advisory organization.

insurer's last rate filing for this coverage in Arkansas, or if the Arkansas methods differ from those used countrywide, attach an explanation of the differences.

d. Explain any adjustments for large or catastrophic losses that were made in the statistical information on losses.

e. Display the calculation of the estimate of investment income on net unearned premiums and loss reserves.

f. Display the calculation of any loading or contingency factor used in this filing.

h. State steps taken to control losses for the coverages included in this filing.

i. Explain any adjustments made by the trending components of the filing. If significant trends within this State are utilized, a narrative describing the basis of the trend must by included.

j. The determination of the weighting of credibility assigned to Arkansas must be fully explained.

k. If common classes are grouped together for rate making purposes because the data far one particular class is not credible either for Arkansas or countrywide, all class codes utilized in developing credibility must be stated with Arkansas experience for each class affected shown separately.

1. Any additional information the Department may require.

3. Rate Filing Deadlines.

The proposed effective date of the filing shall be not less than thirty (30) days after the filing has been received by the Department. If the information which supplements the filing in accordance with Section 7(B) (2) is not sufficient for the Department to determine whether the filing meets the requirements of Ark. Code Ann. § 23-67-219, the Department will notify the filing insurer or advisory organization. If the insurer or advisory organization is required to submit additional information, the effective date of the proposed filing shall not be less than thirty (30) days after such "* information is received by the Department.

4. Maintenance of Uniform Data Base.

Independent filings based upon a classification system other than the classification system filed by a designated advisory organization must be accompanied by an explanation of the method the insurer will utilize to compile and report data in compliance with Ark. Code Ann. remain on file with the Department: intends to delay, modify, or not adopt a particular advisory organization's loss cost reference filing, the insurer must notify the Department in writing. The insurer's on-file loss cost adjustments will remain in effect until disapproved by the Department, withdrawn by the insurer or until the insurer files and receives approval of a revised Form RF-VC.

d. Final rate pages for all workers' compensation classification codes must be filed with the Department.

e. Nothing in these procedures shall be construed to require advisory organizations or their participating insurers to immediately refile rates previously implemented. Any participating insurer of an advisory organization is authorized to continue to use all rates and deviations filed for its use until disapproved, or the insurer makes its own filing or files Form RF-VC adopting the advisory organization's prospective loss costs or a modification thereof.

Section 8. PROCEDURES FOR FORK FILINGS - All Lines.

All forms submitted for review must comply with the applicable provisions of Ark. Code Ann. §§ 23-79-101, et seq. Pursuant to Ark. Code Ann. § 23-79-109, this Section shall not apply to surety bonds, nor to policies, riders, endorsements, or forms of unique character designed for and used with relation to insurance upon a particular subject.

1. Filing Cover.

a. I£ a copy of the filing, bearing the appropriate stamp of the Department, is to be returned to the filer, two (2) copies of the filing cover letter of submission are required together with a postage paid envelope addressed to the filing insurer, insurance holding company group, or advisory organization. One (1) copy of the filing cover documenting the action taken by the Department will be returned to the filing insurer, insurance holding company group, or advisory organization. An additional copy of the filing cover for each affiliated company utlizing the documents is required. In addition, the entire filing packet, consisting of all filings, supporting information and exhibits, shall be sequentially numbered or contain a table of contents, and the total number of pages comprising the filing packet shall be referenced in the filing cover.

b. The filing cover must include sufficient information to identify the forms contained therein completely without need for further reference to attached memoranda, forms, exhibits.or other documents.

c. If the information required by Section 8(2) below is not included with the filing, the filing shall be deemed incomplete and will not be reviewed.

d. Any insurer may satisfy its obligation to submit form filings by becoming a member of or subscriber to a licensed advisory organization which makes filings on its behalf, provided that nothing contained in this Regulation shall be construed as requiring any insurer to become a

ARKANSAS INSURANCE DEPARTMENT

1123 South University, Suite 400

Little Rock, AR 72204

501-686-2975

ARKANSAS RATE FILING ABSTRACT FORM INSTRUCTIONS

The attached form is for inter-departmental purposes to track company loss costs. Companies are required to complete this form although some of the information requested is a duplication of information provided elsewhere.

1.Line of Insurance fBv Coverage): List each coverage that is separately rated or which has a separate loss cost multiplier, for example, Auto BI, PD, Phy. Damage, etc.

2.Indicated % Rate Level Change: Percent of change as indicated through actuarial date for each coverage as listed in column 1. Show overall change at bottom of column.

3.Requested % Rate level Change: Chosen rate level change. Show by coverage as listed in column 1. Show indicated overall rate change at bottom of the column.

4.Expected Loss Ratio: Enter expected loss ratio as shown on Form RF-2, Item 4(A), or Form RF-WC, Item 4(A) for Workers' Compensation.

5.Loss Cost Modification Factor: Enter the loss cost modification factor as shown on From RF-2, Item 2(A) or Form RF-WC, Item 2(A) for Workers' Compensation.

6.Selected Loss Cost Multiplier: Enter the loss cost multiplier as shown on From RF-2, Item 6 or Form RF-WC, Item 8 for Workers' Compensation.

7.Expense Constant: Enter the selected company expense constant as developed in Item 6 of Page 3, Form RF-2 (if applicable).

8.Company Current Loss Cost Multiplier: Enter the loss cost multiplier for each coverage currently on file with the Department. If this is a first-tune conversion from rates to loss costs, enter the Bureau's underlying LCM.

Future Filings: Indicate with Yes or No, whether the submitted loss cost factors are to apply to future filings.

Maximum Rate Increase/Decrease: Indicate the estimated maximum rate increase and decrease applicable to the filing being submitted and give territory affected.

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054.00.96 Ark. Code R. 003

4/19/1996