OAR 836-060-0043: Use of Rates — Direct Business Only

(1) An insurer that files rates or has rates on file that are not in excess of the prima facie rates shown in OAR 836-060-0026 and 836-060-0031, to the extend adjusted pursuant to 836-060-0041 may use those rates without further proof of their reasonableness except as may be required by the Director. (2) An insurer may file for approval of and may use rates that are higher than the prima facie rates shown in OAR 836-060-0026 and 836-060-0031, to the extent adjusted pursuant to 836-060-0041, if it can be expected that the use of such higher rates will result in a ratio of claims incurred to premiums earned (assuming the use of such higher rates) that is commensurately higher, depending on the upward deviation, for those accounts to which the higher rates apply and that the upward deviations will not result on a statewide basis for that insurer of a ratio of claims incurred to premiums earned of less than the expected loss ratio underlying the current prima facie rate developed or adjusted pursuant to 836-060-0041. The insurer must justify the rates by showing its compensation structure, including compensation to lenders and other producers. If rates higher than the prima facie rates shown in 836-060-0026 and 836-060-0031, to the extent adjusted pursuant to 836-060-0041, are filed for approval, the filing shall specify the account to which the rates apply. Such rates may be applied on an equitable basis approved by the Director only to one or more accounts of the insurer for which the experience has been less favorable than expected. (3) This section establishes approval periods of deviated rates, as follows: (a) A deviated rate shall be in effect for a period of time not longer than the experience period used to establish such rate (i.e. one year, two years or three years). An insurer may file for a new rate before the end of a rate period, but not more often than once during any twelve-month period. A deviated rate expires at the end of the rate period unless refiled and approved again by the Director; (b) Notwithstanding section (1) of this rule, if an account changes insurers, the succeeding insurer may use the rate approved to be used for the account by the prior insurer only if the rate is filed by the succeeding insurer and approved for use on the account for the remainder of the rate approval period approved for the prior insurer or until a new rate is approved for use on such account, if sooner. (4) An insurer may at any time use a rate for an account that is lower than its filed rate without notice to the Director. (5) For purposes of this rule: (a) "Experience" means "earned premiums" and "incurred claims" during the experience period; (b) "Experience Period" means the most recent period of time for which experience is reported, but not for a period longer than three full years. For purposes of an individual policy, a year is a calendar year. For purposes of a group policy, a year is either a calendar year or policy year, at the option of the insurer; (c) "Incurred Claims" means total claims paid during the experience period, adjusted for the change in claim service.