Current through Register Vol. 39, No. 6, September 16, 2024
The information required by N.C.G.S.
58-36-15(h) for rate filings
made by the North Carolina Rate Bureau affecting other than workers'
compensation or nonfleet private passenger automobile policies shall be
presented as follows:
Note: If the data required by this Rule are not currently
being collected or reported, or are not currently readily available, the
insurers shall commence prospectively collecting and reporting such data
beginning on January 1, 1993. If certain data are not regularly collected
through the statistical plan, a special call for such data to companies whose
aggregate written premium is at least two-thirds of the total North Carolina
written premium for the coverages affected by the filing may be substituted.
Thereafter, such required data as have accrued shall be included in each filing
until enough data are available to satisfy fully this Rule. If in addition to
the full years of data specified in any of the Subparagraphs in this Rule, 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 time the rates
were promulgated for the experience period.
(a) Include premium, loss, and loss
adjustment expense, and expense data from all companies writing a coverage
affected by the filing. In addition, if exposures are used in the calculation
of premiums at present rates, provide all available exposure data from these
companies. If the experience of any of the 50 largest writers (based on North
Carolina written premium) of such insurance has been excluded from any rate
level, trend, loss development, relativity, or investment income calculations
for that coverage, identify 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) In filings producing an overall rate
level change for farmowners policies, use only the experience from coverages
under the jurisdiction of the North Carolina Rate Bureau when calculating that
change. Indicate if and how non-Bureau data has been segregated and if and how
such data has affected any aspect of the filing (e.g., trend, expense
provisions, etc.).
(c) Clearly
describe all adjustments to premiums, losses, loss adjustment expenses,
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 sufficient.
(d) 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 the
calculations, and justify all aggregate factors used.
(e) Provide the latest written and earned
premiums and market shares for the ten largest writers (based on North Carolina
written premium) of the coverages affected by the filing.
(f) In filings producing an overall rate
level change for either homeowners or farmowners policies, provide composite
loss and premium information from each of the latest two Annual Statements for
which aggregate data are available for the 50 largest writers (based on North
Carolina written premium) of the coverages affected by the filing, including
the following:
(i) Underwriting and
Investment Exhibit, Part 2;
(ii)
Underwriting and Investment Exhibit, Part 3A;
(iii) North Carolina Page 14 (for all such
companies).
For homeowners filings, provide the information on line 4;
for farmowners filings, the information on line 3.
(g) In filings affecting either homeowners or
farmowners policies, provide to the extent possible the following information
on companies deviating from the homeowners or farmowners rates of the North
Carolina Rate Bureau for each of the latest five calendar years:
(i) A list of all companies writing at
deviated rates;
(ii) The 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) The average percentage
deviation for companies writing at deviated rates;
(vi) The average percentage deviation for all
companies.
(h) In
filings affecting either homeowners or farmowners policies, provide to the
extent possible the following information on companies issuing dividends on
North Carolina homeowners or farmowners policies for each of the latest five
calendar years:
(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) The average percentage
dividend issued by companies issuing dividends;
(vi) The average percentage dividend issued
by all companies.
(i) In
filings producing an overall rate level change, provide the following
information on losses and loss adjustment expenses, separately for liability
and property losses, for each year of loss experience used in calculating that
change:
(i) Paid losses and number of paid
claims;
(ii) Case basis reserves
and number of outstanding claims;
(iii) Applied loss development
factor;
(iv) Loss adjustment
expense factor;
(v) Applied trend
factor;
(vi) Trended incurred
losses and loss adjustment expenses;
(vii) The expected loss ratios that were
anticipated in the rates in effect during that year.
(j) If data from monoline coverages is used
in the determination of package rate levels or vice versa, provide to the
extent possible the following information:
(i) A clear description of the differences
between the types of data;
(ii) A
description of which causes of loss are included or excluded;
(iii) Information on whether any companies
have been excluded from either monoline or package data;
(iv) Comparable loss data for all years
included in the filing, if available. (For example, if monoline experience
before a certain date supplements package experience after that date, also
include the monoline experience after that date.)
(k) 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 possible. If the number of years
included differs from the number available, indicate the years excluded and
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.
(l) In filings producing an
overall rate level change, provide loss data by cause of loss in as much
statistical detail as is available for each year used in calculating that
change and describe any adjustment procedures or factors applied to the
separated data.
(2)
Credibility factor development and application. Provide all information
relating to the derivation of all 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 the filing.
(f) Details on the application of the
methodology to the filing.
(3) Loss development factor derivation and
application on both paid and incurred bases and in both numbers and dollars of
claims. In filings producing an overall rate level change for homeowners
policies, provide the information requested in Subparagraphs (3)(a) through
(3)(g). For farmowners policies that include losses on other than a calendar
year basis, provide the information requested in Paragraphs (3)(a) and (3)(g).
(a) All information relating 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 the filing;
(vi) Details on the
application of the methodology to the filing.
(b) Complete (including the upper left
portion) paid loss development triangles for matching companies, separately for
property and liability losses, for the latest ten available years at all
available development points and also the loss development factors and
five-year average factors derivable from these triangles. Also provide the
estimated earned premium and exposures corresponding to each year.
(c) The same information in Subparagraph
(3)(b) for incurred losses.
(d) The
same information in Subparagraph (3)(b) for the number of paid
claims.
(e) The same information in
Subparagraph (3)(b) for the number of outstanding claims.
(f) If available, the information in
Subparagraphs (3)(b), (3)(c), (3)(d), and (3)(e) by cause of loss.
(g) Statements regarding any changes in
reserve adequacy that have occurred in the latest five years from each of the
ten largest writers (based on North Carolina written premium) of the line
affected by the filing.
(4) Trending factor development and
application:
(a) Provide all information
relating to the derivation of all loss 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 the filing;
(vi) Details on the
application of the methodology to the filing.
(b) If external indices are used for trending
purposes, provide evidence that such indices are appropriate indicators of the
selected cost changes. Include comparisons between the actual changes in loss
costs and those estimated by the indices.
(c) In filings producing an overall rate
change for either homeowners or farmowners policies, provide all available
industry data for North Carolina on changes in loss frequency and severity, by
cause of loss for each of the latest five calendar years.
(5) Changes in premium base resulting from
rating exposure trends.
(a) Provide all
information relating to the derivation of all premium 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 the filing;
(vi) Details on the
application of the methodology to the filing.
(b) In filings producing an overall rate
level change for either homeowners or farmowners policies, provide all
available exposure distributions by policy term for each of the latest five
calendar years and estimate any changes to those distributions that are
expected during the years during which the proposed rates are expected to be in
effect. Also estimate for the same period the premium distribution by policy
term.
(6) Limiting
factor development and application. Provide information on the following items:
(a) Limitations on the losses included in the
statistical plans used in the filing.
(b) Limitations on the extent of the rate
level change by coverage, by coverage amount, by form, by protection class, by
construction, and by deductible.
(c) Limitations on the extent of territorial
rate changes.
(d) Any other
limitations.
(7)
Overhead expense development and application of commission and brokerage, other
acquisition expenses, general expenses, taxes, licenses, and fees.
(a) Provide all information relating to the
derivation of all 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 the filing;
(vi) Details on the
application of the methodology to the filing.
(b) In filings producing an overall rate
level change for either homeowners or farmowners policies, provide earned
premium and unallocated loss adjustment expenses for each of the latest five
available calendar years.
(c) In
filings producing an overall rate level change for either homeowners or
farmowners policies, provide statements regarding any activities affecting
expense or service levels undertaken in the last five years by each of ten
largest writers (based on North Carolina written premium) of the line affected
by the filing.
(8)
Percent rate change.
(a) Provide the overall
statewide rate change and also the changes by coverage, coverage amount, form,
protection class, construction, and deductible.
(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 implementation
date(s).
(c) If the rate changes
eventually implemented differ from those included 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 average rates for
each coverage, coverage amount, form, protection class, construction, and
deductible. (In filings involving a large number of possible rates, information
on rating factors and their application may be substituted for the actual
rates.)
(b) If the rates eventually
implemented differ from those included in the filing, submit a supplement to
the filing that describes the implemented rates in the same detail as described
in Subparagraph (9)(a). 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) In filings producing an overall
rate level change, calculate the amount of investment income earned on loss,
loss expense, and unearned premium reserves (as a ratio to earned premium) from
North Carolina policies affected by the filing, for each of the latest five
available 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 at the end of each of the latest five
available calendar years. Also describe and justify all assumptions used in
such calculations.
(b) In filings
producing an overall rate change for either homeowners or farmowners policies,
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 latest ten available calendar years.
(c) In filings producing an overall rate
change for either homeowners or farmowners policies, 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 the line
affected by the filing (based on North Carolina written premium), 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, column 4 or column 3.
(11) Identification of applicable
statistical plans and programs and certification of compliance with them.
(a) Identify all statistical plans used or
consulted in preparing the 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 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 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. In filings producing an overall rate level change for either
homeowners or farmowners policies, calculate the resulting rates of return
(including consideration of investment income) on equity capital, on statutory
surplus, and on total assets produced by the selected underwriting profit and
contingencies provisions. Show the derivation of all factors used in 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. In filings producing an overall rate level
change, include information on the needed level of capital/surplus, including
the following:
(a) Aggregate premium to
surplus ratios for each of the latest ten available calendar years for those
companies writing the coverages affected by the filing during that entire
period.
(b) Estimates of the
comparable ratios for all companies writing the coverages affected by the
filing for the years during which the proposed rates are expected to be in
effect.
(c) Information on the
amount of surplus needed to support the writing of the particular coverages
affected by the filing, taking into consideration the riskiness of such
coverages and a description of the assumptions used in the derivation of that
amount.
(d) 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 the filing;
(vi) Details on the application of the
methodology to the filing.
(14) Such other information that may be
required by any rule adopted by the Commissioner.
(a) Provide all information related to the
derivation of the 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 the filing;
(vi) Details on the
application of the methodology to the filing.
(b) In filings producing an overall rate
level change for either homeowners or farmowners policies, include agendas and
minutes of meetings of the North Carolina Rate Bureau affecting the filing and
a list of all attendees at these meetings, their titles, and their
affiliations.
(c) In filings
producing an overall rate level change for either homeowners or farmowners
policies, describe all payments to all consultants (including lawyers,
actuaries, and economists) related to the current and previous filing of the
same type. If payments cannot be specifically identified as relating to
particular filings, estimate them.
(d) Identify and describe all changes in
methodologies from any previous North Carolina filings affecting the same
coverages made within the last five years.
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. October 1, 1990;
Pursuant to
G.S.
150B-21.3A, rule is necessary without
substantive public interest Eff. January 3,
2017.
