Utah Administrative Code
Topic - Insurance
Title R590 - Administration
Rule R590-127 - Rate Filing Exemptions
Section R590-127-6 - (a) Rating, Special Risk Rating

Universal Citation: UT Admin Code R 590-127-6

Current through Bulletin 2024-06, March 15, 2024

(1) A rate that is developed by an underwriter through an (a) rating process is exempt from the filing requirements of Section 31A-19a-203.

(2) An underwriter is permitted to use (a) rating only in the following circumstances:

(a) when the underwriter can clearly demonstrate that a risk described by specific classifications in the Commercial Lines Manual presents unique or unusual conditions of exposure or hazard such that the application of the normal manual rate for that classification does not produce a reasonable and equitable rate for the risk ;
(i) the underwriter should bear in mind that a manual classification is understood to be general in nature and may not exactly describe the risk being considered ; and

(ii) an (a) rating is not to be used simply because the risk does not exactly match the manual classification description;

(b) when the coverage to be written is broader or more restricted than the coverage the manual definition of coverage provides as limited by applicable manual exclusions;

(c) when the insurer has developed a program for a type of risk or coverage that is not included in the Commercial Lines Manual and for which there is limited statistical data for ratemaking purposes;

(d) when a risk develops more than $100,000 in annual manual basic limits unmodified premium for automobile liability, general liability, glass, and theft insurance, individually, or $250,000 in any combination ; or

(e) when the one-year deposit premium charged for the coverages afforded is $50,000 or more for boiler and machinery risks.

(3)

(a) When an underwriter uses (a) rating , the underwriting file shall contain the following:
(i) a full explanation showing that the risk fits one of the circumstances described in Subsection (2); and

(ii) full and supporting factual documentation showing the development of the rate assigned by the underwriter containing an analysis of :
(A) the specific definable loss potential characteristics;

(B) a comparison to similar risks and their manual rates, available loss frequency, and severity data;

(C) an analysis of current engineering reports; and

(D) any other pertinent underwriting criteria.

(b) The underwriting file shall be made available to the commissioner upon request.

(4)

(a) When an insurer renews a risk that has been (a) rated according to Section R590-127-6, the underwriting file shall contain documentation of the underwriter's reevaluation of the (a) rating and justification for the continuation of the (a) rating.

(b) If the (a) rating produces a renewal premium that varies more than plus or minus 25% from the expiring policy premium, the underwriting file documenting the rate development for the prior term and the renewal term, and an explanation for the change in premium, shall be made available to the commissioner upon request.

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