Current through Register Vol. 49, No. 6, March 15, 2024
PURPOSE: This rule provides procedures for filing or
furnishing rates and other information with the Missouri Department of
Insurance.
(1) The
requirements for filing classifications, rates, rating plans, manual rules,
policies and forms with the Department of Insurance are as follows:
(A) Commercial Property Insurance. Submission
shall be made within ten (10) calendar days after the effective date;
(B) Casualty & Surety Insurance, Except
Commercial Casualty Insurance. Submission shall be made within ten (10)
calendar days after the effective date; and
(C) Commercial Casualty Insurance. Submission
shall be made no later than ten (10) calendar days after the effective date
which is requested within the filing, unless the filing produces an increase or
decrease exceeding twenty-five percent (25%) annually from changes in the base
rate, rating basis, rating plan, manual rules, territorial definitions or
combination of these rating system components, in which case the submission
shall be made sixty (60) days prior to the effective date within the filing for
prior approval.
(2)
Definitions
(A) "Commercial casualty
insurance" means "commercial casualty insurance" as that term is defined in
section
379.882(1),
RSMo. In addition, "commercial casualty insurance" means casualty insurance for
business or nonprofit interests, including policies providing liability
insurance in-a) multiperil policies, b) farm policies, except farm policies
issued in conjunction with or which include fire and extended coverages on
owner-occupied habitational property not exceeding two (2) families, c)
commercial automobile policies, d) aircraft insurance and e) any other business
or commercial type policy.
(B)
"Expense reduction plan" means any rating plan or system whereby a base rate
for property or liability insurance is reduced based upon a reduction in
acquisition, underwriting or loss adjustment expense associated with the
risk.
(C) "Experience rating plan"
means any rating plan or system whereby a base rate for commercial insurance is
adjusted or modified based on the actual past loss experience of the
insured.
(D) "Individual risk
premium modification plan" or "IRPM plan" means any rating plan or system
whereby a base rate for commercial insurance is adjusted or modified based upon
a schedule of debits and credits reflecting observable rating characteristics,
not reflected in the base rate itself, expected to affect an individual
insured's future loss exposure.
(E)
"Schedule rating plan" means any rating plan or system whereby a base rate for
commercial insurance is adjusted or modified based upon a schedule of debits
and credits reflecting observable rating characteristics, not reflected in the
base rate itself, expected to affect an individual insured's future loss
exposure.
(3) The use of
schedule rating plans or individual risk premium modification plans in a manner
which would effectively circumvent the intent of the commercial casualty rating
law, sections
379.882,
379.883,
379.884,
379.885, 379.886, 379.888, 379.889, 379.890, 379.893 and 379.895, RSMo, shall
be construed to be improper and subject to the disapproval authority set forth
in the law.
(4) Licensed rating
organizations which submit filings on behalf of their members and subscribers
must comply with these provisions. Neither reference filings nor adherence to
rating organization filings or deviations shall circumvent the commercial
casualty insurance rating law.
(5)
If distributed to an insurer, rating organizations are required to submit a
copy of the following to the Department of Insurance: manuals of
classifications, rules, underwriting rules and rates, rating plans, their
modifications and the forms to which these rates are applicable. Rating
organization circulars which pertain to future rate, rule or form filings are
to be submitted to the department for informational purposes at the same time
such information is sent to the member insurers.
(A) A member or subscriber of a rating
organization may elect in advance, by letter to the Department of Insurance, to
adopt all submissions, or the rates, rules or forms for any specific lines or
sublines of insurance, of a rating organization containing a proposed effective
date on that effective date. The insurer may then give notice to the Department
of Insurance that it will not adhere to any specific submission if it does so
within ten (10) calendar days after the rating organization's proposed
effective date.
(B) Members and
subscribers of a rating organization may notify the Department of Insurance by
letter of their election to adopt by reference a specific submission or
reference document of the rating organization. This election shall be received
within ten (10) calendar days after the insurer's effective date.
(6) Any insurer which elects to
use its own rates is required to submit to the Department of Insurance every
manual and classification, rule, underwriting rules and rates, every rating
plan and every modification of them which it uses and the policies and forms to
which these rates are applicable. This submission shall be made as provided by
section (1) of this rule.
(7)
Commercial Individual Risk Premium Modification Plans and Schedule Rating
Plans.
(A) Classification rates may be
modified to produce rates for individual risks in accordance with rating plans
which establish standards for measuring variations in hazards or expense or
both. Rating plans may not allow a total credit or debit of more than
twenty-five percent (25%) based on risk characteristics and not more than ten
percent (10%) additional credit based on reduction of expenses.
(B) Subsection (7)(A) does not apply to
experience rating plans.
(C) It
shall be impermissible for affiliated insurers within a group under common
management or control to shift insurance accounts among the affiliated insurers
in order to circumvent the restrictions on schedule rating provided in
subsection (7)(A).
(D) All debits
and all credits based on individual risk characteristics, and all additional
credits based on reduction of expenses shall be based on evidence that is
contained in the file of the insurer at the time the debit or credit is
applied.
1. Evidence supporting the basis for
any rating credit or debit shall be retained by the insurer for the policy term
plus two (2) calendar years, in accordance with section
374.205,
RSMo.
2. Any renewal notice of a
commercial casualty insurance policy as defined in section
379.882,
RSMo, for any Missouri risk or portion thereof which would have the effect of
increasing the premium charged to the insured due to a change in any schedule
rating factor applied to the policy during the previous policy period shall
contain or be accompanied by a notice to the insured containing information
that any inquiry by the insured concerning the increased premium may be
directed to the insurer or the insurer's insurance producer.
3. Upon receipt of a request as described in
paragraph (7)(D)2. above, the insurer, directly or through the insurer's
insurance producer, shall inform the insured in writing in terms sufficiently
clear and specific of the basis for any reduction in a schedule rating credit
or increase in a schedule rating debit which is applied to the policy. This
response must be provided to the insured within ten (10) calendar days of the
insurer or the insurer's insurance producer receiving the request. A copy of
the request from the insured and the written notice to the insured shall be
contained in the file of the insurer, remaining there for not less than the
duration of the policy term plus two (2) calendar years in accordance with
section
374.205,
RSMo.
(E) This rule
does not require the filing of individual risk policies by insurance companies
when those policies are rated in accordance with subdivision (1) of subsection
1 of section
379.888,
RSMo.
*Original authority: 374.045, RSMo 1967, amended 1993,
1995; and 379.893, RSMo 1987, amended 1993,
1995.
