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