New York Codes, Rules and Regulations › Title 11 - INSURANCE › Chapter V - Rates And Rating Organizations › Subchapter D - Rate Regulation And Promotion Of Competition › Part 160 - Responsibilities In Construction And Application Of Rates › Section 160.2 - Rates

Current through Register Vol. 46, No. 28, July 10, 2024
(a) Basis for rates
				  in competitive markets. The purpose of the law is to encourage the freest and
				  fastest response of prices to competitive and cost conditions, recognizing the
				  special difficulties in rate-making in the insurance industry, with the fewest
				  regulatory restraints on competition consistent with the public interest. In
				  constructing rates, insurers and rating organizations must in good faith
				  consider and base rates upon the factors named in sections 2303 and
				  2304  of the Insurance Law. In refining and
				  applying these factors, management shall be guided by sound judgment, accepted
				  financial and insurance practices, the opinions of qualified technical experts
				  within the areas of their expertise, and prevailing and anticipated conditions.
				  The past interpretations and standards of the Insurance Department are not
				  necessarily controlling. Ordinarily, in the construction of a rate or of rates,
				  an insurer or rating organization will rely upon past loss and expense
				  experience likely to have reliability as a predictor of the costs which may be
				  experienced on the business which it is anticipated will be written at the rate
				  or rates. In the exercise of informed and technically competent judgment, such
				  experience may consist of an insurer's own past experience, the past experience
				  of other insurers, or reasonable combination of both. For the rating
				  organization, such experience may consist of the loss and expense experience of
				  members, or members and subscribers, or of other insurers or rating
				  organizations, or a reasonable combination of these. Where past expense or loss
				  experience or both is not credible or is incomplete or where conditions
				  affecting the validity of the experience have changed, or where it is
				  reasonably anticipated that conditions affecting the validity of the experience
				  are likely to change, rates may be predicated on informed judgment fairly
				  exercised on the basis of the best available data.
(b) Expenses; allocation. Expense costs
				  except where otherwise reasonably allocable ordinarily shall be spread over all
				  insureds or classes on a fair and consistent basis, giving due consideration to
				  the provisions of section 2304  of the Insurance Law relating to
				  expenses.
(c) Rates pursuant to
				  plan or system. Ordinarily, insurers must charge rates in accordance with a
				  plan or system of classifications and rates established or adopted by the
				  insurer. The plan or system may include provisions for modification of rates
				  under prescribed circumstances or conditions, provided that any such
				  modifications shall apply to all risks under the same or substantially the same
				  circumstances or conditions. An insurer may satisfy this requirement by
				  adopting the advisory plan or system of classifications and rates currently
				  issued by a licensed rating organization. Nothing in these regulations shall
				  preclude two or more insurers coming within the definition of insurer in
				  section 160.l(a) of these regulations from using different rates,
				  classifications, territories, rating plans, rating systems, underwriting rules
				  or policy forms.
(d) Advisory rate.
				  The fact that two or more authorized insurers, whether or not members or
				  subscribers of a rating or advisory organization or of an actuarial, forms,
				  rating or other committees thereof, use either consistently or intermittently
				  the advisory rates or rating systems made or adopted by a rating organization,
				  or the rules, classifications, policy or bond forms prepared by a rating or
				  advisory organization, or, as members or subscribers, participate in the
				  operations and functions of such rating or advisory organization, or the fact
				  that two or more insurers, either consistently or intermittently, authorize
				  such a rating organization to act in their behalf pursuant to section 2316  of the Insurance Law shall not be
				  deemed to constitute an agreement to charge or to adhere to the rates, rating
				  plans, rating systems, rules, classifications, territories, or forms, or
				  otherwise constitute anticompetitive behavior.
(e) Support for rates. Insurers must maintain
				  in their files accessible to the department evidence of the factors and data
				  considered in the making of rates. Such evidence may consist in whole or part
				  of the rates promulgated by licensed rating organizations. Rating organizations
				  shall make available to members and subscribers the information underlying the
				  schedules of rates, rating plans, rules, classifications and territories, made
				  or adopted by such rating organization. Such information shall be available in
				  such form and detail as will reasonably permit the management of each member
				  and subscriber insurer to ascertain the basis on which the schedule of rates,
				  rating plans, rules, classifications and territories are constructed.
(f) Review of rates. Insurers and rating
				  organizations shall review their rates at reasonable intervals to ascertain
				  whether changes in conditions or developed loss and expense experience or other
				  considerations indicate a need for adjustment of rates. If such review
				  indicates a need for rate adjustment, an insurer or rating organizations shall
				  promptly undertake the process of effecting such adjustment. An insurer may
				  comply with this subdivision by relying upon the review at reasonable intervals
				  by the rating organizations of which it is a member or a subscriber, provided
				  it has reasonable grounds to believe that the rating organization itself
				  remains in compliance with this subdivision. What constitutes a reasonable
				  interval will vary with the kind or class or insurance involved, the volume
				  written, and other factors and should be determined by the exercise of sound
				  judgment and with reference to the reasonable and customary practices of
				  business.
(g) Prevention of
				  improperly charged rates. Insurers shall establish adequate procedures to
				  minimize the occurrence of improperly charged rates and shall in fact pursue
				  such procedures. Use of the audit services of a licensed rating organization
				  shall constitute an adequate such procedure unless the superintendent informs
				  the insurer otherwise. The fact that an insurer has, in writing, authorized a
				  rating organization to act upon its behalf in complying with any of its
				  obligations under article 23 of the Insurance Law until such time as the
				  authorization is supplemented, amended or revoked shall not be deemed to be in
				  violation of the requirements of section 2316  of the Insurance Law.