North Carolina Administrative Code
Title 11 - INSURANCE
Chapter 10 - PROPERTY AND CASUALTY DIVISION
Section .1100 - RATE FILINGS
Section 10 .1104 - NONFLEET PRIVATE PASSENGER AUTOMOBILE
Universal Citation: 11 NC Admin Code 10 .1104
Current through Register Vol. 39, No. 6, September 16, 2024
The information required by N.C.G.S. 58-36-15(h) for nonfleet private passenger automobile rate filings shall be presented as follows:
Note: If data required by this Rule, other than that specified in Subparagraph (3)(c), are not being collected or reported, or are not readily available to insurers prior to January 1, 1991, then insurers shall commence as of that date prospectively collecting and reporting such data. The date for commencing prospectively collecting and reporting the data specified in Subparagraph (3)(c) is January 1, 1992. Thereafter, such required data as have accrued shall be included in each filing until enough data are available to fully satisfy this Rule. If in addition to the full years of data specified in any of the Subparagraphs below, more recent data of less than a full year are available, such data shall also be provided. If updates to the information specified in any of the Subparagraphs in this Rule become available before the close of evidence relating to the filing, they shall also be provided.
(1) North Carolina earned premiums at the actual and current rate level; losses and loss adjustment expenses, each on paid and incurred bases without trending or other modification for the experience period, including the loss ratio anticipated at the times the rates were promulgated for the experience period:
(a) Include premium, loss, loss adjustment
expense, expense, and exposure data from all companies writing North Carolina
nonfleet private passenger automobile insurance. If the experience of any
company that writes more than one percent of the North Carolina nonfleet
private passenger automobile written premium has been excluded from any rate
level, trend, loss development, or investment income calculation for any
coverage, identify the coverage, the company and its market share and provide
an explanation for its exclusion. Also estimate the aggregate market share of
other companies whose experience is excluded from such calculations.
(b) Include data relating to increased limits
factors and deductible credits if such factors have not been reviewed in the
last two filings or reviews. Provide justification that the factors and credits
contained in the filing are neither excessive, inadequate, nor unfairly
discriminatory. Also provide all information related to their derivation,
including the following:
(i) A description of
all data reviewed and all worksheets used;
(ii) complete description of the methodology
used to derive these factors and credits;
(iii) A description of alternative
methodologies used or considered for use in the last three years;
(iv) A description of the criteria used to
select a methodology;
(v) Specific
details on the application of these criteria in the selection of a methodology
for this filing;
(vi) Details on
the application of the methodology to this filing.
(c) Clearly describe all adjustments to
premiums, losses, loss adjustment expenses, and exposures included in the
filing. Show the unadjusted amounts to which adjustments were made, identify
the specific adjustments, provide details on the derivation and application of
the adjustment factors, and describe all intermediate calculations. Where
identical adjustments are applied to a set of similar data, an example of one
of these adjustments is similar.
(d) For each coverage, include actual earned
premiums and calculate earned premiums at present rates. Also indicate how such
calculations were produced, supply supporting documentation for a sample of
such calculations, and justify any aggregate factors used.
(e) Provide the latest written and earned
premiums and market shares for the ten largest writers of North Carolina
nonfleet private passenger automobile insurance.
(f) Provide composite loss and premium
information from each of the latest two Annual Statements for the 50 largest
writers of North Carolina nonfleet private passenger insurance, including the
following:
(i) Underwriting and Investment
Exhibit, Part 2, Lines 19 and 21;
(ii) Underwriting and Investment Exhibit,
Part 3, Lines 19 and 21;
(iii)
North Carolina Page 14, Lines 19.1, 19.2, and 21.1.
(g) Except in filings made by the North
Carolina Reinsurance Facility, provide to the extent possible the following
information on companies deviating from the nonfleet private passenger
automobile rates of the North Carolina Rate Bureau for each of the latest five
calendar years by line:
(i) A list of all
companies writing at deviated rates;
(ii) he estimated premium written at deviated
rates;
(iii) The estimated
percentage of statewide premium written at deviated rates;
(iv) The amount of deviations in
dollars;
(v) he average percentage
deviation for companies writing at deviated rates;
(vi) The average percentage deviation for all
companies.
(h) Except in
filings made by the North Carolina Reinsurance Facility, provide the following
information on companies issuing dividends on North Carolina nonfleet private
passenger automobile policies for each of the latest five calendar years by
line:
(i) A list of all companies issuing
dividends;
(ii) The estimated
premium of companies issuing dividends;
(iii) The estimated percentage of statewide
premium written by companies issuing dividends;
(iv) The amount of dividends in
dollars;
(v) he average percentage
dividend issued by all companies issuing dividends;
(vi) The average percentage dividend issued
by all companies.
(i)
Provide the following information on losses and loss adjustment expenses:
(i) A comparison of the undeveloped and
untrended private passenger automobile liability and physical damage losses and
premium contained in the latest three Annual Statements and those contained in
the filing. Identify the causes of the differences and provide approximate
quantification of the effects of each cause;
(ii) For each rate level implemented in the
latest three calendar years, the expected loss ratios that were anticipated in
the implemented rates, by coverage;
(iii) For each accident year included in the
filing, paid losses, case basis reserves, loss development, incurred allocated
loss adjustment expense (if collected separately from losses), estimated
incurred unallocated (or combined allocated and unallocated) loss adjustment
expense, applied trend factors, and trended incurred losses and loss adjustment
expenses, by coverage.
(j) Whenever North Carolina losses are
separated into excess (catastrophe) and nonexcess (noncatastrophe) losses,
provide a clear description and justification of the standard used to separate
such losses. Include as many years of data as are available. If the number of
years used differs from the number available, provide an explanation. Also
provide an explanation if the data from which the excess loading is derived
differs from that on which the rate level change is based.
(k) Territorial rate calculations shall
include earned premiums, incurred losses, and the number of claims by territory
for each of the years used to determine the territorial relativities.
(2) Credibility factor development and application. Provide all information related to the derivation of the credibility factors contained in the filing, including the following:
(a) A description of all data reviewed and
all worksheets used.
(b) A complete
description of the methodology used to derive these factors.
(c) A description of alternative
methodologies used or considered for use in the last three years.
(d) A description of the criteria used to
select a methodology.
(e) Specific
details on the application of these criteria in the selection of a methodology
for this filing.
(f) Details on the
application of the methodology to this filing.
(3) Loss development factor development and application on both paid and incurred bases and in both numbers and dollars of claims:
(a) Provide all information related to
the derivation of all loss development factors contained in the filing,
including the following:
(i) A description of
all data reviewed and all worksheets used;
(ii) A complete description of the
methodology used to derive these factors;
(iii) A description of alternative
methodologies used or considered for use in the last three years;
(iv) A description of the criteria used to
select a methodology;
(v) Specific
details on the application of these criteria in the selection of a methodology
for this filing;
(vi) Details on
the application of the methodology to this filing.
(b) Provide for each liability coverage,
complete (including the upper left portion) total limits paid loss development
triangles for the ten latest available accident years at all available
development points for matching companies. Also provide the corresponding loss
development factors and five-year average factors derivable from these
triangles. Also provide estimated earned premium and exposures corresponding to
each accident year.
(c) Provide the
information in Subparagraph (3)(b) for basic limits paid losses.
(d) Provide the information in Subparagraph
(3)(b) for total limits incurred losses.
(e) Provide the information in Subparagraph
(3)(b) for basic limits incurred losses.
(f) Provide the information in Subparagraph
(3)(b) for the number of paid claims.
(g) Provide the information in Subparagraph
(3)(b) for the number of outstanding claims.
(h) Provide the information in Subparagraphs
(3)(b), (3)(c), (3)(d), (3)(e), (3)(f), and (3)(g) separately for voluntary and
ceded business.
(i) For each of the
15 largest writers of North Carolina nonfleet private passenger automobile
insurance, provide a statement regarding any reserve strengthening or weakening
that has occurred in the last five years.
(4) Trending factor development and application:
(a) Provide all information
related to the derivation of all trend factors contained in the filing,
including the following:
(i) A description of
all data reviewed and all worksheets used;
(ii) A complete description of the
methodology used to derive these factors;
(iii) A description of alternative
methodologies used or considered for use in the last three years;
(iv) A description of the criteria used to
select a methodology;
(v) Specific
details on the application of these criteria in the selection of a methodology
for this filing;
(vi) Details on
the application of the methodology to this filing.
(b) Provide the following trend data for the
latest available five calendar years by coverage:
(i) Fast-track loss data, both countrywide
and for North Carolina (separately for frequency and severity);
(ii) All North Carolina internal loss trend
data (separately for frequency and severity);
(iii) Countrywide external expense trend
data;
(iv) North Carolina internal
expense trend data from the Bureau Special Call for Expense
Experience.
(c) For all
trend data described in this Rule, calculate annual trend factors and
coefficients of correlations as follows:
(i)
Include calculations based on the latest six, nine, twelve and fifteen-point
periods.
(ii) Include calculations
using both exponential and straight line methods.
(d) Provide an assessment of the suitability
of historical trends as predictors of future trends and examine changes in
seat-belt usage, in the drinking age, in the price of gasoline, and in miles
driven. If it is determined that such changes or any other legislative,
regulatory, social, and economic factors affecting frequency and severity
trends will materially impact anticipated losses and that such impact is not
reflected by historical trend data, provide all analyses and data relied on to
assess such impact and to incorporate it into the filing.
(5) Changes in premium base resulting from rating exposure trends:
(a) Provide all
available exposure distributions by policy term for each of the latest five
calendar years and estimate any changes to those distributions during the years
in which the proposed rates are expected to be in effect. Also estimate for the
same period the premium distribution by policy term.
(b) Provide available data on changes in age
and symbol distributions for physical damage coverages over the latest ten
calendar years, calculate the trends in such distributions, and demonstrate how
such trends have been included in the calculation of earned premiums at present
rates.
(6) Limiting factor development and application. Provide information on the following items:
(a) Limitations on losses included in the
statistical data used in the filing.
(b) Limitations on the extent of the rate
level change by coverage.
(c)
Limitations on the extent of territorial rate changes.
(d) Any other limitations applied.
(7) Overhead expense development and application of commission and brokerage, other acquisition expenses, general expenses, taxes, license, and fees:
(a) Provide all information related to the
derivation of the expense provisions contained in the filing, including the
following:
(i) A description of all data
reviewed and all worksheets used;
(ii) A complete description of the
methodology used to derive these provisions;
(iii) A description of alternative
methodologies used or considered for use in the last three years;
(iv) A description of the criteria used to
select a methodology;
(v) Specific
details on the application of these criteria in the selection of a methodology
for this filing;
(vi) Details on
the application of the methodology to this filing.
(b) Provide earned premiums and unallocated
loss adjustment expenses for each of the latest five calendar years by coverage
or by groups of coverages.
(c) For
each of ten largest writers of North Carolina nonfleet private passenger
automobile insurance, provide statements regarding any activities affecting
expense or service levels undertaken in the last five years.
(8) Percent rate change.
(a) Provide the overall statewide rate change
by coverage and by deductible for physical damage coverages.
(b) If the proposed rate changes are
dependent on the actual implementation date(s) of the new rates, indicate the
number of days after the issuing of the Commissioner's order that are required
for an orderly implementation of a change in rates. Also indicate all aspects
of the rate filing that will vary with a change in the implementation
date(s).
(c) If the rate changes
eventually implemented differ from those provided in the filing, submit a
supplement to the filing that describes the implemented changes and the
modifications made to the filing to produce them. This supplement shall be
submitted as soon as possible after a decision is reached to implement rates
other than those that were originally filed and in any case no later than the
first implementation date of the rates.
(9) Final proposed rates:
(a) Provide the proposed rates for each
territory and coverage.
(b) If the
rates eventually implemented differ from those provided in the filing, submit a
supplement to the filing that describes the implemented rates and the
modifications made to the filing to produce them. This supplement shall be
submitted as soon as possible after a decision is reached to implement rates
other than those that were originally filed and in any case no later than the
first implementation date of the rates.
(10) Investment earnings, consisting of investment income and realized plus unrealized capital gains, from loss, loss expense, and unearned premium reserves.
(a)
Calculate the amount of investment income earned on loss, loss expense, and
unearned premium reserves (as a ratio to earned premium) from North Carolina
nonfleet private passenger automobile policies for each of the latest five
calendar years and estimate that income for the current year and for all years
during which the proposed rates are expected to be in effect. Provide the
details of such calculations, including the amount of the composite reserves of
each type at the beginning and end of each of the latest five calendar years.
Also describe and justify all assumptions used in such calculations.
(b) Provide information on the estimated
average length of time that elapses between the occurrence of a loss or
accident in North Carolina and the payment of a claim on that loss or accident.
The average shall be a weighted average based on the size of the claim
payments. Estimate how the length has changed over the last ten
years.
(c) Provide composite asset,
liability, and income information from each of the latest two Annual Statements
for which aggregate data are available for the 50 largest writers of North
Carolina nonfleet private passenger automobile insurance, including the
following (in the same format and detail as the exhibits in individual company
statements):
(i) Page 2 (Assets);
(ii) Page 3 (Liabilities, Surplus and Other
Funds);
(iii) Page 4 (Underwriting
and Investment Exhibit);
(iv)
Insurance Expense Exhibit, Part II, columns 19.1, 19.2 and 21.1.
(11) Identification of applicable statistical plans and programs and a certification of compliance with them:
(a) Identify all statistical plans
used or consulted in preparing this filing and describe the data compiled by
each plan.
(b) Provide a
certification that there is no evidence known to the Bureau or to the
statistical agencies involved that the data that were collected in accordance
with such statistical plans and were used in the rate filing are not true and
accurate representations of each company's experience to the best of that
company's knowledge.
(c) Provide
general descriptions of the editing procedures used to verify that the data
were collected in accordance with the statistical plans, and concise summaries
of the adjustments and corrections made to the consolidated ratemaking
data.
(12) Investment earnings on capital and surplus. Given the selected underwriting profit and contingencies provisions contained in the filing, calculate the resulting rates of return (including consideration of investment income) on equity capital, on statutory surplus, and on total assets. Show the derivation of all factors used in producing these calculations and justify the fairness and reasonableness of these rates of return.
(13) Level of capital/surplus needed to support premium writings without endangering the solvency of member companies:
(a) Provide
aggregate premium to surplus ratios for the latest ten available calendar years
for those companies writing North Carolina nonfleet private passenger
automobile insurance during that entire period.
(b) Provide estimates of the comparable
ratios for all companies writing North Carolina nonfleet private passenger
automobile insurance for all years during which the proposed rates are expected
to be in effect.
(c) Provide
information on the amount of surplus needed to support the writing of North
Carolina nonfleet private passenger automobile insurance, taking into
consideration the riskiness of the lines, and describe the assumptions used in
the derivation of that amount.
(d)
Provide all information relating to any explicit or implicit allocation of
surplus by state and by line undertaken in the filing, including the following:
(i) A description of all data reviewed and
all worksheets used;
(ii) A
complete description of the methodology used to produce this
allocation;
(iii) A description of
alternative methodologies used or considered for use in the last three
years;
(iv) A description of the
criteria used to select a methodology;
(v) Specific details on the application of
these criteria in the selection of a methodology for this filing;
(vi) Details on the application of the
methodology to this filing.
(14) Such other information that may be required by any rule adopted by the Commissioner:
(a) Provide all information relating to the
derivation of the underwriting profit and contingencies provisions contained in
the filing, including the following:
(i) A
description of all data reviewed and all worksheets used;
(ii) A complete description of the
methodology used to derive these provisions;
(iii) A description of alternative
methodologies used or considered for use in the last three years;
(iv) A description of the criteria used to
select a methodology;
(v) Specific
details on the application of these criteria in the selection of a methodology
for this filing;
(vi) Details on
the application of the methodology to this filing.
(b) Include copies of all agendas and minutes
of meetings of the North Carolina Rate Bureau and the North Carolina
Reinsurance Facility affecting the filing, as well as a list of all attendees
at these meetings, their titles, and their affiliations.
(c) Except in filings made by the North
Carolina Reinsurance Facility, describe all payments made to all consultants
(including lawyers, actuaries, and economists) related to this filing and the
previous one on nonfleet private passenger automobile insurance. If payments
can not be specifically identified as related to particular filings, estimate
them.
(d) Identify and describe all
changes in methodologies from the previous North Carolina nonfleet private
passenger automobile rate filing made by the same filer.
If any collected or reported data required by this Rule are provided within 30 days after the initial submission of a filing, that data shall be made a part of the filing, provided the initial submission acknowledges that it is incomplete and identifies specifically what further data are to be submitted within the time permitted. No filing otherwise complete shall be deemed proper until such time as all data required by this Rule have been submitted.
Authority
G.S.
58-2-40;
58-36-15(h);
Eff. June 1, 1989;
Amended Eff. October 1, 1990;
Pursuant to
G.S.
150B-21.3A, rule is necessary without
substantive public interest Eff. January 3,
2017.
Disclaimer: These regulations may not be the most recent version. North Carolina may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
