§ 2248.42. Approval and Use of Upward Deviated Rates.

(a) For life insurance and disability insurance, an insurer may submit, for the Commissioner's approval, proposed upward deviated rates for an experience group subject to § 2248.39(b) after the end of an experience period during which the credibility adjusted loss ratio for the group equaled or exceeded PLR + .05.

(b) Credibility adjusted loss ratios using prima facie rates and new case rates for an experience group subject to upward deviated rates shall be redetermined as of each anniversary of the effective date of such rates for the group.

(1) For life insurance and disability insurance, if the credibility adjusted loss ratio for the experience group as of the time of redetermination does not attain at least PLR + .05, then the insurer shall terminate such upward deviated rates within 180 days of the end of the experience period during which the credibility adjusted loss ratio failed to attain PLR + .05. Insurers shall notify the Commissioner of the termination of upward deviated rates.

(2) If the rates in effect as of such redetermination exceed by 10% or more the new case rates, then the insurer shall submit, for the Commissioner's approval, proposed reduced rates which shall not exceed the new case rates. This submission shall be made within 180 days of the date as of which the new case rates were determined.

(3) If the new case rates exceed the rates in effect as of such redetermination by 10% or more, then the insurer may submit, for the Commissioner's approval, increased rates not to exceed the new case rates.

(c) The Commissioner shall disapprove submissions of proposed reduced rates pursuant to subsection (b)(2) if it is not demonstrated to him or her that they have been determined in accordance with applicable statutes and regulations.

Approved reduced rates shall become effective for the experience group within 60 days of the Commissioner's approval. The Commissioner may approve a later effective date if it is demonstrated to him or her that the approved rates cannot reasonably be implemented within 60 days of his approval.

(d) The Commissioner may disapprove proposed deviated rates if it is not demonstrated to him or her that they have been determined in accordance with applicable statutes and regulations. Upward deviated rates may become effective at any time after the Commissioner's approval or upon the 120th day following the submission of such proposals if they have not been disapproved by that day.

(e) Upward deviated rates may continue to be used where an entire experience group has transferred to a new insurer only until the next annual redetermination.

(f) No insurer shall transfer a creditor group it already insures to an experience group subject to upward deviated rates. An insurer may assign a newly insured creditor group subject to an upward deviated rate under its prior insurer into an experience group subject to upward deviated rates only if the assignment would not result in a higher rate for the newly-insured creditor group or the existing experience group.

(g) This Section shall not preclude the Commissioner from otherwise considering proposals for rates in excess of the prima facie rates for specific creditors, creditor groups or products if it is demonstrated to him or her that the prima facie rates provide inadequate allowances for claim costs, expenses, reserves or profits or are inconsistent with other reasonable actuarial considerations given the circumstances of their particular application.

(h) Calculations for new case rates or deviated rates under Class A shall use two adjustments, before and after applying the formulas. First, adjust the earned premiums by deducting 10 cents per 1000. Apply the formulas and then add back 10 cents per 1000 to obtain the final new case or deviated rate.

HISTORY

1. New section filed 4-14-94; operative 5-16-94. Submitted to OAL for printing only pursuant to Government Code section 11343(a)(1) (Register 94, No. 15).

2. Amendment of section and Note filed 10-2-2001; operative 10-1-2001. Submitted to OAL for printing only pursuant to Government Code section 11340.9(g) (Register 2001, No. 40).

3. Amendment of subsection (h) filed 1-9-2002; operative 1-9-2002. Submitted to OAL for printing only pursuant to Government Code section 11340.9(g) (Register 2002,, No. 2).

Note

Note: Authority cited: Sections 779.21 and 779.36, Insurance Code. Reference: Sections 779.9, 779.13, 779.16 and 779.36, Insurance Code; Sections 18191, 18290-18292, 22314, 22315 and 22455, Financial Code; and Credit Insurance General Agents Association v. Payne , (1976) 16 Cal. 3d 651.