Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) Every insurer offering or selling a policy of
private passenger automobile insurance shall submit a class plan which complies with
this subchapter to the Commissioner for review. The following shall apply to all
class plans submitted in accordance with this subchapter:
(1) A class plan shall be considered to have been
received by the Commissioner on the date that it is received by the Department's
Rate Filing Bureau.
(2) Within 15
working days of receipt, the Commissioner shall review filings submitted pursuant to
this subchapter for completeness. If the Commissioner determines that the class plan
is not complete, notice stating the grounds for incompleteness will be given to the
insurer within the 15 working day period and the filing of the class plan will be
rejected.
(3) Rejection of the filing of
a class plan for incompleteness shall not relieve any insurer of the duty to file a
complete class plan.
(b) Class
plans submitted for review shall contain a completed class plan application, in a
form prescribed by the Commissioner, and underwriting guidelines.
(c) Eliminating the effects of gender as a rating
factor.
(1) Revised class plan. In order to comply
with the 2018 amendments to Section
2632.5 that become effective on January
1, 2019, insurers shall file with the Department no later than July 1, 2019 a
revised class plan for each program of private passenger automobile insurance under
which the insurer issues a "policy" as defined in Subdivision (a) of Insurance Code
section
660. The revised
class plan shall, in each case, be substantively identical to the most recently
approved iteration of the class plan (hereinafter the "prior class plan"), except as
provided in this subdivision (c)(1).
(A) The
revised class plan shall eliminate all effects of gender as a rating factor,
regardless of whether gender was used as a stand-alone rating factor, or in
combination with any other rating factor, in the prior class plan. In its revised
class plan the insurer shall demonstrate that the revised class plan complies with
the weight ordering requirements stated in subdivision (d) of Section
2632.8 and subdivision (e) of Section
2632.5. The calculation of weights in
the revised class plan shall be performed using the same distribution of vehicles as
was used in the prior class plan.
(B)
The analysis of rating factors pursuant to Section
2632.7 that was included in the prior
class plan shall remain unchanged in the revised class plan.
(C) Where gender was used as a rating factor in
combination with any other rating factor in the prior class plan, the revised class
plan shall eliminate all effects of the use of gender as a rating factor.
1. The following steps shall be performed with
respect to each combined rating factor that in the prior class plan included gender:
a. Use the same distribution of vehicles as was
used in the prior class plan;
b.
Separate the combined rating factor into its component rating factors and isolate
one component rating factor at a time; the order in which each component factor is
separated out and isolated in the revised class plan may differ from the order in
which it was separated out and isolated in the prior class plan, except that the
years driving experience component must still be separated out and isolated
first;
c. Remove the gender
component;
d. For each isolated
component factor that remains, demonstrate compliance with the weight ordering
requirements stated in subdivision (d) of Section
2632.8 and the individual weight
ordering requirement stated in subdivision (e) of Section
2632.5; and
e. Recombine the relativities of the remaining
component factors that had been combined with gender in the prior class plan, in
order to calculate the relativities of the recombined rating factor, from which
gender has been removed. For purposes of this Subdivision (c)(1)(C), a recombined
rating factor may be comprised of a single factor.
2. The weights of all of the rating factors used
in the revised class plan, when considered individually, must comply with the weight
ordering requirements stated in Section
2632.8. The relativities of a
recombined rating factor, from which the gender factor has been removed, may be
pumped or tempered pursuant to subdivision (d) of Section
2632.8, if necessary in order to
achieve this result. Alternatively, the relativities of one or more of the remaining
component rating factors of a recombined rating factor may be pumped or tempered
pursuant to subdivision (d) of Section
2632.8, if necessary in order to
achieve compliance with the weight ordering requirements stated in Section
2632.8.
(D) The relativities assigned to any rating factor
that in the prior class plan was not combined with the gender rating factor shall in
the revised class plan remain unchanged from the prior class plan.
(E) The class plan application accompanying the
revised class plan shall demonstrate that the change from the prior class plan to
the revised class plan is revenue neutral, based on the current distribution of
vehicles. In order for the change to be revenue neutral, there must be no projected
change in premium for the book of business in question. A change in the base rate
may be used in order to ensure that the change from the prior class plan to the
revised class plan is revenue neutral.
(F) The class plan application accompanying the
revised class plan shall illustrate the expected market dislocation resulting from
the change from the prior class plan to the revised class plan. The calculation of
market dislocation shall be based on the current distribution of vehicles.
(G) Subdivision (b) of this Section
2632.11 notwithstanding, the following
application pages and supporting exhibits, and no other documentation, shall be
included in the class plan application accompanying the revised class plan:
1. CP-1: General Company Information,
2. CP-2: Insurer Group Multi-Company
Filing,
3. CP-4: Filing
Checklist,
4. CP-5: Rating Factors
Checklist,
5. CP-9: Rating Logic
Samples,
6. CP-10: Market Dislocation
Summary,
7. Exhibit 1 - Explanatory
Memorandum,
8. Exhibit 2 - Filing
History,
9. Exhibit 7 - Factor
Weights,
10. Exhibit 8 - Revenue
Neutral, and
11. Exhibit 12 - Complete
Rate and Rule Manual.
For purposes of this subdivision (c)(1)(G)11., the insurer shall
submit a marked-up copy of the rate and rule manual for the prior class plan, and a
clean copy of the rate and rule manual, reflecting the removal of gender as a rating
factor in the revised class plan.
(2) Exception. Insurers need not file a revised
class plan pursuant to subdivision (c)(1) of this section for any program of private
passenger automobile insurance in which gender is used neither as a stand-alone
rating factor nor in combination with any other rating factor.
(3) Class plan applications submitted in the
ordinary course; pending class plan applications. For any class plan filed with the
Commissioner on or after January 1, 2019, the provisions of Section
2632.5 as that section was amended
effective January 1, 2019 shall apply. However, for any class plan that was filed
with, but that had not been approved or rejected by, the Commissioner before January
1, 2019, the provisions of Section
2632.5 as that section existed on the
day the class plan was filed shall apply. In no event, however, shall a class plan
that does not comply with Section
2632.5 as that section was amended
effective January 1, 2019 be approved after June 30, 2019.
(d) Any class plan change approved by the
Commissioner shall be implemented no later than 90 days after the date the plan is
approved by the Commission. Implementation, as referred to herein, shall apply to
both the issuance of new policies and renewals, and the implementation shall not
result in unfair discrimination between insureds that are issued new and renewal
policies.
(e) The Commissioner shall
approve or reject a class plan submitted by an insurer within 90 days of the date a
completed class plan application is received by the Commissioner.
(f) An insurer whose class plan has been rejected
by the Commissioner may, within 30 days of the date of such rejection, request a
hearing before the Commissioner. Such hearing shall be conducted in compliance with
California Insurance Code section
1861.08, and the
insurer requesting such hearing shall have the burden of proving that the rejected
class plan complied with all applicable statutes and regulations.
(g) Any change to an approved class plan or values
assigned to the rating factors, and any change to the values assigned to the make,
model, value, cost of repair, or auto symbol for the insured vehicles requires the
prior approval of the Commissioner. Proposed changes must be submitted with a class
plan application.
(h) Every insurer that
uses auto symbols for any vehicle must submit its methodology for determining such
symbols, and all values and relativities associated therewith, to the Commissioner
for approval prior to use. Any subsequent changes in methodology must also be
submitted to the Commissioner for approval prior to use. Further, every insurer that
uses auto symbols must submit the following to the Commissioner, annually, on a date
to be agreed upon between the insurer and the Commissioner, or if no agreement is
reached, on a date to be specified by the Commissioner:
(1) all auto symbols, and the values and
relativities associated therewith, that the insurer proposes to use during the
ensuing 12 months. For a new auto model which becomes available after the date upon
which the submission is made, the insurer shall assign a symbol according to the
insurer's approved symbol methodology, and the insurer may then commence using the
symbol. Such symbols shall be submitted for approval to the Commissioner with the
insurer's next annual submission of all auto symbols.
(2) data sufficient to support any proposed
changes in auto symbols, or changes in the values or relativities associated with
any auto symbols, including but not limited to, damageability studies;
(3) data sufficient to show the anticipated impact
of any class changes in auto symbols upon the total revenue generated by the
insurer's private automobile insurance business.
(i) Every insurer that does not use auto symbols,
but which uses make, model, value, cost of repair, as factors in determining rates
and premiums for private passenger automobile insurance must submit its methodology
for determining such factors, and all values and relativities associated therewith,
to the Commissioner for approval prior to use. Any subsequent changes in methodology
must also be submitted to the Commissioner for approval prior to use. Further, every
insurer that uses such factors must submit the following to the Commissioner,
annually, on a date to be agreed upon between the insurer and the Commissioner, or
if no agreement is reached, on a date to be specified by the Commissioner:
(1) All factors, and the values and relativities
associated therewith, that the insurer proposes to use during the ensuing 12 months.
For a new auto model which becomes available after the date upon which the
submission is made, the insurer shall determine factors according to the insurer's
approved methodology, and the insurer may the commence using the factors. Such
factors shall be submitted for approval to the Commission with the insurer's next
annual submission of all factors;
(2)
data sufficient to support any proposed changes in such factors, or changes in the
values or relativities associated therewith, including, but not limited to,
damageability studies;
(3) data
sufficient to show the anticipated impact of any changes in factors upon the total
revenue generated by the insurer's private passenger automobile insurance
business.
(j) Insurers may use
auto symbols determined by advisory organizations that are in compliance with
Insurance Code Section
1855, et seq. In
lieu of the requirements of subpart (h) above, insurers shall submit to the
Commissioner, annually, on a date to be agreed upon between the insurer and the
Commissioner, or if no agreement is reached, on a date to be specified by the
Commissioner, the following:
(1) a statement that
the insurer proposes to use the symbols of an advisory organization;
(2) the identity of the advisory
organization;
(3) sufficient information
to identify the auto symbols of the organization that the insurer proposes to
use.
1. Certificate of
Compliance as to 3-17-94 order including repealer and new section transmitted to OAL
7-12-94 and filed 8-23-94; operative 9-22-94 (Register 94, No. 34). For prior
history, see Register 94, No. 11.
2. New subsection (a) and amendment of
NOTE filed 7-5-96; operative 8-4-96 (Register 96, No. 27).
3. Amendment
of subsections (a), (a)(3) and (c)-(d) and amendment of NOTE filed 7-14-2006;
operative 8-13-2006 (Register 2006, No. 28).
4. Repealer of former
subsections (c)-(c)(8) and new subsections (c)-(c)(3) filed 12-31-2018; operative
1-1-2019. Submitted to OAL for filing and printing only pursuant to Government Code
section
11340.9(g)
(Register 2019, No. 1).
5. Change without regulatory effect amending
subsection (a)(1) filed 8-27-2020 pursuant to section
100, title 1, California Code of
Regulations (Register 2020, No. 35).
6. Editorial correction of
subsection (c)(1)(C)2. (Register 2020, No. 50).
Note: Authority cited: Section
1861.02,
Insurance Code; and Calfarm Insurance Company v. Deukmejian (1989) 48 Cal.3d 805.
Reference: Section
1861.02,
Insurance Code.
