The California Department of Insurance's Rate Regulation Branch announced on March 8, 2010 that it is proposing changes to the Prior Approval Rate Filing Instructions, which are posted on the Department's website. The applicable regulations are not being changed.
The proposed changes will allow companies which have affinity groups or "coverage difference" programs in their Private Passenger Auto filings to make the filings on either an individual program basis or on an all program combined basis. The current Filing Instructions require that the filings be made on an individual program basis.
Under the proposed changes, if an all program combined filing is made, a calculation reflecting each program's premium and loss history must be included. Each individual program's rate level must be justified in relation to the insurer's Private Passenger Auto program as a whole with respective loss ratios.
The Department believes that by allowing combined premium and loss experience, loss development and trend, the result will be a more actuarially credible overall rate indication. Allowing combined experience for the complement of credibility will result in indications for affinity groups and coverage difference programs that are more sound than those produced by separate data. The changes will also reduce the amount of duplicative paperwork.
Insurers will still have to support the rate differentials between affinity groups and coverages in a separate Exhibit 15, so there will be no compromise of the oversight process.
The CDI has solicited input from interested parties before it implements the proposed changes. Any comments must be received by April 9, 2010