Louisiana Revised Statutes 22:1454 – Rating standards and methods
Terms Used In Louisiana Revised Statutes 22:1454
- classification: means the process of grouping risks with similar risk characteristics so that differences in costs may be recognized. See Louisiana Revised Statutes 22:1452
- commissioner: shall mean the commissioner of insurance. See Louisiana Revised Statutes 22:1451
- Competitive market: means any market except those which have been found to be noncompetitive pursuant to La. See Louisiana Revised Statutes 22:1452
- Excessive: means a rate that is likely to produce a long-term profit that is unreasonably high for the insurance provided. See Louisiana Revised Statutes 22:1452
- Expenses: means that portion of a rate attributable to acquisition, field supervision, collection expenses, general expenses, taxes, licenses, and fees and does not include loss adjustment expenses. See Louisiana Revised Statutes 22:1452
- Inadequate: means a rate which is unreasonably low for the insurance provided and either the continued use of which endangers the solvency of the insurer using it or will have the effect of substantially lessening competition or creating a monopoly in any market. See Louisiana Revised Statutes 22:1452
- Market: means the interaction between buyers and sellers in the procurement of a line of insurance pursuant to the provisions of this Subpart. See Louisiana Revised Statutes 22:1452
- Rate: means that cost of insurance per exposure unit, whether expressed as a single number or as a prospective loss cost, with an adjustment to account for the treatment of loss adjustment expenses, expenses, profit, and variation in expected future loss experience, prior to any application of individual risk variations based on actual past loss or expense considerations, and does not include minimum premiums. See Louisiana Revised Statutes 22:1452
- Unfairly discriminatory: means not capable of being actuarially justified or based on race, color, creed, or national origin. See Louisiana Revised Statutes 22:1452
A. Rates shall not be inadequate or unfairly discriminatory in a competitive market. Rates shall not be excessive, inadequate, or unfairly discriminatory in a noncompetitive market. Risks may be classified using any criteria except that no risk shall be classified on the basis of race, color, creed, or national origin.
B. In determining whether rates are excessive, inadequate, or unfairly discriminatory, consideration may be given to the following items:
(1) Basic rate factors. Due consideration shall be given to past and prospective loss and expense experience within and outside the state, catastrophe hazards and contingencies, events, or trends within and outside the state, dividends or savings to policyholders, members, or subscribers, and all other relevant factors and judgments. Fines and penalties against an insurer, whether levied by a court or regulatory body, shall not be used by the insurer or considered in any manner in the loss or expense experience for the purpose of setting rates or making rate filings.
(2) Classification. Risks may be grouped by classification for the establishment of rates and minimum premiums. Classification rates may be modified for individual risks in accordance with rating plans or schedules which establish standards for measuring probable variations in hazards or expenses, or both.
(3) Expenses. The expense provisions shall reflect the operating methods of the insurer, the past expense experience of the insurer, and anticipated future expenses.
(4) Contingencies and profits. The rates shall contain a provision for contingencies and a provision for a reasonable underwriting profit and shall reflect investment income directly attributable to unearned premium and loss reserves.
(5) Other relevant factors. Any other factors available at the time of the rate filing.
C. Except as provided by this Subpart, the commissioner shall not approve or otherwise regulate rates.
Acts 2007, No. 459, §1, eff. Jan. 1, 2008; Acts 2008, No. 402, §1, eff. June 21, 2008; Redesignated from La. Rev. Stat. 22:1402.2 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009.
NOTE: Former La. Rev. Stat. 22:1454 redesignated as La. Rev. Stat. 22:22 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009.