Mich. Admin. Code R. 500.1501

Current through Vol. 24-21, December 1, 2024

Section R. 500.1501 - Definitions

Rule 1.

(1) As used in these rules:

(a) "Classification" means a grouping of individuals or risks on the basis of 1 or more characteristics for purposes of measuring and rating differences in anticipated losses or expenses, or both. A classification does not include a grouping of individuals or risks solely for statistical data gathering purposes.

(b) "Code" means the insurance code of 1956, 1956 PA 218, MCL 500.100 to 500.8302.

(c) "Complaint" means a written statement by a person to an insurer, a producer, or the director claiming that an insurer or producer has improperly denied him or her automobile insurance or home insurance or has charged an incorrect premium for automobile insurance or home insurance.

(d) "Denial" or "denied" means both declination and termination.

(e) "Incorrect premium" means a premium charged for automobile insurance or home insurance that is not consistent with a rate or rating plan or classification approved by the department.

(f) "Loss portion" means the portion of a rate that is attributable to provisions for incurred losses and allocated loss adjustment expenses.

(g) "Loss ratio" means any of the following ratios for a specified time period, as appropriate for the context of evaluation:

(i) The ratio of actual incurred losses to total earned premiums at collected rate levels.

(ii) The ratio of actual incurred losses to total earned premiums at current rate levels.

(iii) The ratio of reasonably anticipated incurred losses to total estimated earned premiums at proposed rate levels.

(h) "Rating cell" means a group of individuals or risks for which a single rate is determined when 2 or more rating classifications are combined to define a population of individuals or risks for rating purposes.

(i) "Relativity" means either the ratio of rates for any 2 rating classifications or the absolute difference in rates for any 2 rating classifications, whichever is applicable for a particular rating system.

(j) "Uncertainty of loss" means a measure of the nature and the extent of the variability of actual losses for a group of individuals or risks from the mean anticipated loss for the group and includes other similar measures of risk.

(k) "Underwriting" means the offer or refusal to insure, the offer or refusal to continue to insure, or the limitation of the amount of coverage available to, an individual, risk, or class of individuals or risks.

(2) A term defined in the code has the same meaning when used in these rules.

Mich. Admin. Code R. 500.1501

1981 AACS; 2021 MR 6, Eff. 3/24/2021