20-356. Making of rates
All rates subject to this article shall be made in accordance with the following
provisions:
1. Rates shall not be excessive, inadequate or unfairly discriminatory. No rate
shall be held to be inadequate unless the director finds that the loss experience of the
insurer in the classification covered by the rate has been adverse for a continuous
period of not less than two years immediately preceding the date of such finding.
2. Due consideration shall be given to past and prospective loss experience within
and outside this state, to catastrophe hazards, if any, to a reasonable margin for
underwriting profit and contingencies, to dividends, savings or unabsorbed premium
deposits allowed or returned by insurers to their policyholders, members or subscribers,
to past and prospective expenses within and outside this state and to all other relevant
factors within and outside this state.
3. The systems of expense provisions included in the rates for use by any insurer
or group of insurers may differ from those of other insurers or groups of insurers to
reflect the requirements of the operating methods of any such insurer or group with
respect to any kind of insurance, or with respect to any subdivision or combination
thereof for which subdivision or combination separate expense provisions are applicable.
4. Risks may be grouped by classifications for the establishment of rates and
minimum premiums. Classification rates may be modified to produce rates for individual
risks in accordance with rating plans which establish standards for measuring variations
in hazards or expense provisions, or both. Such standards may measure any differences
among risks that can be demonstrated to have a probable effect upon losses or expenses.
5. Nothing in this article shall be construed to prohibit payment of dividends by
insurers issuing policies on the participating plan, or by mutual or reciprocal insurers,
but in the payment of such dividends there shall be no unfair discrimination between
policyholders.
6. Except to the extent necessary to meet the provisions of paragraph 1, uniformity
among insurers in any matters within the scope of this section is neither required nor
prohibited.
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