California Code of Regulations
Title 10 - Investment
Chapter 5 - Insurance Commissioner
Subchapter 4.8 - Review of Rates
Article 4 - Determination of Reasonable Rates
Section 2644.6 - Loss Development
"Loss development" is the process by which reported losses are adjusted for anticipated payout patterns. Loss development shall be presented as a loss-development triangle, based on the dollar-weighted average of the ratios of losses for the three most recent accident-years, policy-years or report-years available for a reporting interval. Filings shall contain both paid losses and case-specific reserves, stated separately. Loss development shall employ either paid losses or the sum of paid losses and case-specific reserves. The insurer shall submit both the factors and ultimate losses or claims for the paid and incurred loss and the reported and the paid claims development calculations, and shall demonstrate that its selection is the most actuarially sound. Loss development data shall exclude catastrophes. Where the loss development factors within a given line significantly vary by subline, by size of loss, or by coverage, separate loss development factors shall be calculated in accordance with that evidence.
1. New section
filed 8-13-91 as an emergency; operative 8-13-91 (Register 92, No. 3). A Certificate
of Compliance must be transmitted to OAL 12-11-91 or emergency language will be
repealed by operation of law on the following day.
2. Repealed by
operation of Government Code section
11346.1(g)
(Register 92, No. 15).
3. New section refiled 2-14-92 as an emergency;
operative 2-14-92 (Register 92, No. 15). A Certificate of Compliance must be
transmittted to OAL 6-15-92 or emergency language will be repealed by operation of
law on the following day.
4. Repealed by operation of Government Code
section
11346.1(g)
and new section filed 3-15-95; operative 3-15-95. Submitted to OAL for printing only
pursuant to Government Code section
11343(a)(1)
(Register 95, No. 11).
5. Amendment filed 1-3-2007; operative 4-3-2007.
Submitted to OAL for printing only pursuant to Government Code section
11340.9(g)
(Register 2007, No. 1).
6. Amendment filed 5-16-2008; operative
5-16-2008. Submitted to OAL for printing only pursuant to Government Code section
11340.9(g)
(Register 2008, No. 20).
Note: Authority cited: Sections 1861.01 and 1861.05, Insurance Code; and 20th Century v. Garamendi, 8 Cal.4th 216 (1994). Reference: Sections 1861.01 and 1861.05, Insurance Code; and Calfarm Insurance Company v. Deukmejian (1989) 48 Cal.3d 805.
