Current through Register Vol. 39, No. 6, September 16, 2024
For those filings meeting one or more of the criteria
described in Rule .1102(5) of this Section, the Commissioner may request, in
addition to the Rate Filing Questionnaire described in Rule .1107 of this
Section, that all or part of the information required by
G.S.
58-41-50(e) shall be
presented as follows:
Note: If the data required by this Rule are not being
collected or are not readily available to insurers prior to January 1, 1990,
the insurers shall commence collecting such data as of July 1, 1990. 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 below requests, more recent data of less than a
full year are available, that data shall also be provided. If updates to the
information requested below become available before a decision is reached on
the filing, they shall also be provided. Such data are for ratemaking purposes
only and should be collected only by those companies to whom this regulation
will apply. If any part of the data requested is inapplicable to the review of
a particular filing and is therefore excluded, an explanation for the exclusion
shall be given. If the filing is being made by a rating organization using all
or part of the data of its member or subscriber companies, the information
provided shall be aggregate or industrywide information and the individual
companies whose data is being used shall be identified. If the filing is being
made by an individual company and is based on an approved filing made by a
rating organization, that approved filing shall be identified and also the
aspects that the company is incorporating in its own filing. It is not
necessary to reproduce the data included in the rating organization's
filing.
(1) North Carolina premium,
loss and loss adjustment experience:
(a) For
each coverage, premium at present rates shall be calculated. Indicate how such
calculations were produced and supply supporting documentation for a sample of
such calculations and an explanation of any aggregate factors used.
(b) Information from the Annual Statement on
losses and premiums shall be included. Provide such information separately from
the latest five Annual Statements for the individual line(s) affected by the
filing:
(i) North Carolina Page 14;
(ii) Part 2;
(iii) Part 2B;
(iv) Part 3A.
(c) The following information on overall rate
level for individual coverages shall be calculated or estimated:
(i) The experience rating plan and schedule
rating plan off-balance;
(ii) The
average deviation from bureau rates;
(iii) The average dividend granted.
If the filing involves a rate change for a particular
classification or territory, rather than an overall statewide rate change, the
same information shall be calculated or estimated for that class or
territory.
(d)
For each coverage and each year used in setting the overall rate level, the
following information on dollars of incurred losses shall be provided:
(i) Paid losses;
(ii) Case basis reserves;
(iii) Loss development;
(iv) Incurred allocated loss adjustment
expense (if collected separately from losses);
(v) Incurred unallocated (or combined
allocated and unallocated) loss adjustment expense;
(vi) Applied trend factor;
(vii) Trended total incurred losses and
LAE.
(e) Whenever North
Carolina or countrywide losses are separated into excess (catastrophe) and
nonexcess (noncatastrophe) losses, a clear description and explanation of the
standard used to separate such losses shall be included. In determining an
excess (catastrophe) loading, supply as many years of data as possible. 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.
(f) Territorial and class rate calculations
shall include earned premiums, incurred losses, and the number of claims for
each of the years used to determine relativities.
(2) Credibility factor development and
application. All relevant information related to the derivation of credibility
factors contained in the filing shall be provided. Include the following
information:
(a) A description of all data
reviewed and of all worksheets used;
(b) A complete description of the methodology
used to derive the 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 one of the various methodologies for inclusion in a
particular filing;
(e) Specific
details regarding 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.
(a) All relevant
information related to the derivation of the loss development factors contained
in the filing shall be provided. Include the following information:
(i) A description of all data reviewed and of
all worksheets used;
(ii) A
complete description of the methodology used to derive the 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 one of the various methodologies for inclusion in a particular
filing;
(v) Specific details
regarding 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) If accident, report, or notice year data
is used in the rate filing, provide for each coverage sufficient total limits
paid loss development data so that at least five loss development factors can
be calculated for each interval for which there has been significant historical
development. Also provide the corresponding loss development factors and
five-year average factors derived from the data.
(c) The same information in Subparagraph (b)
of this Paragraph for basic and total limits incurred losses.
(d) The same information in Subparagraph (b)
of this Paragraph for number of paid claims.
(e) The same information in Subparagraph (b)
of this Paragraph for number of outstanding claims.
(f) A statement regarding any strengthening
or weakening of company reserves that has occurred in the last five years. (If
the filing is by a rating organization, include statements from the ten largest
writers of the coverage in North Carolina whose data has been included in the
filing.)
(4) Trending
factor development and application:
(a)
Available trend data (both countrywide and for North Carolina) for the latest
available five years shall be provided for all coverages.
(b) All relevant information related to the
derivation of the trend factors contained in the filing should be provided.
Include the following information:
(i) A
description of all data reviewed and of all worksheets used;
(ii) A complete description of the
methodology used to derive the 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 one of the various methodologies for inclusion in a particular
filing;
(v) Specific details
regarding 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.
(5) Changes in premium base and
exposures:
(a) Data on the mix of policies by
different policy terms shall be submitted. For the latest five years, include
both the number of policies and the amount of earned premium for different
policy terms.
(b) Data on changes
in distribution of insureds by class and territory shall be submitted. Submit
all information available on such groupings for the latest five
years.
(c) Data on changes in any
inflation sensitive premium bases for the coverage during the latest five years
shall also be included.
(6) Limiting factor development and
application. Information on the following items shall be provided:
(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 or subline;
(c) Limitations on the extent of territorial
and class rate changes;
(d) Any
other limitations applied.
(7) Expenses:
(a) All relevant information related to the
derivation of the expense factors contained in the filing should be provided.
Include the following information:
(i) A
description of all data reviewed and of all worksheets used;
(ii) A complete description of the
methodology used to arrive at the selected loading;
(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 one of the various methodologies for inclusion in a particular
filing;
(v) Specific details
regarding 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) Earned premium and paid and incurred
unallocated loss adjustment expenses for each of the latest five years shall be
included. If available, provide such information by coverage.
(c) The number of paid and incurred claims
and allocated loss adjustment expenses (if such are available separately from
losses) for each of the last five years shall also be included. If available,
provide such information by coverage.
(d) For all incurred (or paid) loss
adjustment expense data contained in the filing, the related incurred (or paid)
losses shall be shown.
(e) A
statement regarding any company expense cutting activities undertaken in the
last five years shall be provided. (If the filing is by a rating organization,
include statements from the ten largest writers of the coverage in North
Carolina whose data has been included in the filing.)
(8) The percent rate change:
(a) The overall statewide rate change shall
be estimated as well as the changes from the previous filing in each of the
following: experience, annual trend factors, the expense provisions, the tax
provision, and the underwriting profit and contingency provision. Also identify
any recent law changes that have affected the calculation of the overall rate
level and estimate their impact.
(b) The information described in Subparagraph
(a) of this Paragraph shall also be estimated by coverage or subline.
(9) Proposed rates:
(a) Proposed rates for each territory,
classification, and coverage shall be provided. (In filings involving a large
number of possible rates, information on rating factors and their application
may be substituted for the actual rates.)
(b) An explanation of how territorial average
rates and classification rates are determined shall be included. Also provide a
sample calculation for each.
(10) Investment earnings. Information on
anticipated investment income is necessary to establish the provision for
underwriting profit in the rates.
(a)
Information on the amount of investment income earned on loss, loss expense,
and unearned premium reserves in relation to earned premium for a particular
line in North Carolina shall be calculated for the latest two years and
estimated for the current year and all years during which the proposed rates
will be in effect. Calculations shall be provided in detail including the
amount of the reserves of each type at the beginning and end of each of the
specified years.
(b) Information on
the payout pattern of North Carolina losses shall be included, including
information on the estimated average length of time that elapses between the
occurrence of an insured loss and the payment of a claim. The average shall be
a weighted average based on size of claim payments. Indicate how the length has
changed in recent years.
(c) To
evaluate recent insurer profitability, provide the following information
separately from the latest two Annual Statements: (If the filing is for more
than one company, composite information shall be provided).
(i) Page 2 (Assets);
(ii) Page 3 (Liabilities, Surplus and Other
Funds);
(iii) Page 4 (Underwriting
and Investment Exhibit);
(iv)
Exhibit I (Analysis of Assets).
(11) Identification and Certification of
Statistical Plans:
(a) All statistical plans
used or consulted in preparing this filing shall be identified. Also describe
the data compiled by each plan.
(b)
A certification that all the data utilized in the rate filing was collected in
accordance with such plans and is a true and accurate representation on the
company's experience to the best of its knowledge shall also be
provided.
(12)
Investment Earnings on Capital and Surplus. Given the selected underwriting
profit and contingencies loadings contained in the filing, indicate the
resulting rate of return on equity capital, on total assets, and on assets
assigned to insurance operations including consideration of investment income.
Show the derivation of all factors used in producing the calculations. Provide
justification that these rates of return are reasonable and fair.
(13) Level of Capital/Surplus Needed:
(a) Premium to surplus ratios for the latest
five calendar years shall be shown.
(b) Estimates of comparable ratios for the
years during which the rates will be in effect shall also be
provided.
(c) Any methodology used
to allocate surplus to individual lines or coverages shall be
described.
(14) Other
Information. All relevant information related to the derivation of the profit
and contingencies loading contained in the filing shall be provided. Include
the following information:
(a) A description
of all data reviewed and of all worksheets used;
(b) A complete description of the methodology
used to arrive at the selected loading;
(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 one of the various methodologies for inclusion in a particular
filing;
(e) Specific details
regarding 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.
(15) Additional information. The Commissioner
may require such other available information as he deems necessary for a proper
review of the rate filing.
Authority
G.S.
58-2-40;
58-41-50(e);
Eff. January 1, 1990;
Amended Eff. April 8, 2002;
Pursuant to
G.S.
150B-21.3A, rule is necessary without
substantive public interest Eff. January 3,
2017.
