Section 7. Procedures for Rate and
Supplementary Rate Information Filings
A. For
All Lines Other Than Workers' Compensation and Employers' Liability.
1. Filing Cover.
a. If 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 or letter of submission are required together with a
postage paid envelope addressed to the filing insurer, insurance holding
company or group, or advisory organization. Insurance holding company groups
submitting rate filings simultaneously for affiliated companies must file a
cover letter for each affiliated company. Only one (1) complete copy of the
rate documents and supporting information need be filed for Departmental
records if the documents are applicable to all affiliated companies. However,
if there are any deviations between or among affiliated companies, supporting
information must be submitted for each company along with separate cover
letters outlining the deviations. Each company must submit in the cover letter
or attached explanatory memorandum a synopsis of each exhibit, the location of
the supporting information within the filing, and the conclusion of the data.
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.
In a competitive market, as defined under Ark. Code Ann. §
23-67-202(2),
insurers shall submit to the Department filings with a proposed effective date.
Such proposed effective date shall not be less than twenty (20) days after the
filing and all information required by Section 7(A)(2) below, has been received
by the Department. If the information required by Ark. Code Ann. §§
23-67-201 et
seq. and this Regulation is not included with the filing, the filing shall be
disapproved.
c. In a competitive
market, if the Department determines after a hearing or by agreement that an
insurer's rates require closer supervision because of the insurer's financial
condition or its rating practices, the insurer shall file with the Department
at least sixty (60) days prior to the effective date all such rates and such
supplementary rate information and supporting information as prescribed by the
Department. Upon application by the filer, the Department may authorize an
earlier effective date. ' A filing shall be deemed to meet the requirements of
Ark. Code Ann. §§
23-67-201 et
seq. and to be effective upon the expiration of the waiting period.
d. In a noncompetitive market, insurers shall
file with the Department rates, supplementary rate information, and supporting
information required by the Department at least sixty (60) days prior to the
effective date. Written applications for the Department's approval of. an
earlier effective date, stating clearly the insurer's reasons for the request,
must accompany the filing. A filing shall be deemed to meet the requirements of
Ark. Code Ann. §§
23-67-201 et
seq. and to be effective upon the expiration of the waiting
period.
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-1), Survey Form APCS
or Homeowners Abstract (Form H-1) 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.
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 be
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 for 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.
l. Any additional information the Department
may require pursuant to Ark. Code Ann. §
23-67-202(11) and
(12) must be included.
3. Reference Filings.
a. If an insurer is a participating insurer
in an advisory organization and decides to use the prospective loss costs in a
reference filing in support of its own filing, the insurer shall make a filing
using the Reference Filing Adoption Form (Form RF-2) in addition to the Rate
Filing Abstract (Form RF-1). The insurer's rates are the combination of the
prospective loss costs and the loss cost adjustments contained in Form RF-2.
Reference filings for Homeowners must also include the Homeowners Abstract
(Form H-1) and Survey Form HPCS. Private Passenger Automobile reference filings
shall include the Private Passenger Automobile Abstract (Form A-1) and Survey
Form APCS.
b. Any participating
insurer in an advisory organization may satisfy its obligation, to file rates,
the prospective loss costs portion of its rates, supplementary rate information
or supporting information by filing a reference to a filing made by the
advisory organization. Such reference filings must include, on the filing cover
letter, the advisory organization's reference document
number.
4. Deviations.
An insurer may file a deviation from the reference document as
filed by the advisory organization. Such filings shall specify the basis for
and adequately justify the request for the deviation and shall be accompanied
by the information required in Section 7(A)(2).
5. Loss Cost Filings.
a. An insurer wishing to adopt an advisory
organization's current loss cost filing must:
(1) Provide the documentation required in
Section 7(A)(2), indicating whether or not the loss cost multiplier is to be
applicable to future filings.
(2)
Provide documentations to support the development of the 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 adopt by
submitting a cover letter so stating and provide the advisory organization's
reference document number.
(2) Pay
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 insurer 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 organization'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.
1. Filing
Cover.
If 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
or letter of submission are required together with a postage paid envelope
addressed to the filing insurer, insurance holding company or group, or
advisory organization. Insurance holding company groups submitting rate filings
simultaneously for affiliated companies must file a cover letter for each
affiliated company. Only one (1) complete copy of the rate documents and
supporting information need be filed for Departmental records if the documents
are applicable to all affiliated companies. However, if there are any
deviations between or among affiliated companies, supporting information must
be submitted for each company along with separate cover letters outlining the
deviations. Each company must submit in the cover letter or attached
explanatory memorandum a synopsis of each exhibit, the location of the
supporting information within the filing, and the conclusion of the data. 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.
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(B)(5). Rate and
form filings must be made separately. The following required documentation
should be identified as an exhibit to 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
calender 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 company-wide 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 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.
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 for 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.
l. 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. §
23-67-219(2)(B).
5. Reference Filings.
a. Any participating insurer in an advisory
organization may satisfy its obligation to file the prospective loss cost
portion of its rates, supplementary rate information or supporting information
by adopting a reference document filing made by an advisory organization, using
forms RF-WC, RF-1 and WC-1. Workers' compensation and employers liability
insurance filings by advisory organizations are advisory only and any insurer
desiring to use those filings shall submit a letter indicating its intent to
file rates, supplementary rate and supporting information by reference to the
filing of the licensed advisory organization. This cover letter shall contain
the advisory organization's reference document number applicable to this
filing.
b. An insurer must notify
the Department if it does not intend to adopt a filing of an advisory
organization. The insurer must submit data and information to justify the
continued use of the rate or supplementary rate information previously filed by
the advisory organization.
6. Deviations.
An insurer may file a deviation from an advisory organization's
loss cost filing. These deviations may be accomplished through the use of the
form RF-WC and attachments thereto. The form WC-1 and RF-1 should accompany the
deviation request. The Department shall approve or disapprove deviations within
thirty (30) days after receipt of the completed deviation filing. The deviation
shall be effective upon approval by the Department.
7. Loss Costs Filings.
a. An insurer wishing to adopt an advisory
organization's current loss cost filing must:
(1) Provide the documentation required in
Section 7(B)(2), indicating whether or not the loss cost multiplier is to be
applicable to future filings.
(2)
Provide documentation to support the development of the 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 adopt by
submitting a cover letter so stating and provide the advisory organization's
reference document number.
(2) Pay
the appropriate fees.
(3) Provide a
copy of the previously filed RF-WC indicating that the loss cost modifier will
he 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-WC.
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-WC adopting the advisory organization's prospective
loss costs or a modification thereof.
