Current through Register Vol. 38, No. 18, March 15, 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.