Transcript Download Handout 1

“What Makes a Good Rate
Filing?”
Chuck Romberger, ACAS, MAAA, CPCU
Pennsylvania Insurance Department
CAS Ratemaking Seminar – March 11-12, 2004
Overview

Know the Filing Environment

Consider Reasonability - Different Perspectives

Explore the Soundness of Data Sources
Know the Filing Environment

Review the state’s Filing Requirements’
Checklist (Part 1 of 3)
In PA, our Checklists are available on our website at:
http://www.ins.state.pa.us/ins/cwp/view.asp?a=1280&
q=527334
 Alternatively, e-mail me at [email protected]
and I’ll send you the link.

Know the Filing Environment

Review the state’s Filing Requirements’
Checklist (Part 2 of 3) – various requirements:
Submission Package
 Transmittal Letter
 General Form
 Policy Provisions
 Rate & Rule (Pricing) Provisions – next slide

Know the Filing Environment

Review the state’s Filing Requirements’
Checklist (Part 3 of 3) – various requirements:

Rate & Rule (Pricing) Provisions
Coverage requirements
 Filing Review (Waiting) Periods
 Filing Review Requirement
 Statutory Pricing Requirements
 Statutory Pricing Prohibitions

Know the Filing Environment

Call or meet with the insurance department
In PA, we continue to welcome and encourage this
type of dialogue.
 We meet with 20 to 30 companies annually to
discuss either initial filing plans or plans to materially
revise existing rating structures prior to the
submission of a filing.

Know the Filing Environment
Review the state’s Filing Requirements and
consider contacting the insurance department
before performing an analysis or preparing a filing
 Keep current on the filing activity of other
companies -- check-out our website:
http://www.ins.state.pa.us/ins/cwp/view.asp?a=12
80&Q=543175&PM=1

Know the Filing Environment
Know the statutory review (waiting) period and
plan for an effective date that you can easily
implement
 Expect a review period generally consistent with
the level of significance of the proposed changes

Consider Reasonability
 Take-on the

policyholder’s perspective
Magnitude of change
 - After
several years of “no change”
 - At the First Renewal
Consistency of current v. prior changes
 How well are your agents or customer service
representatives prepared to explain changes?

Consider Reasonability

Now, take-on the regulator’s perspective (a.k.a.
Identifying common pitfalls)

Unsupported / Judgment-based Selections
-
Loss Development Factors
 - Loss or Premium Trend Factors
 - Territory / Class relativities
Consider Reasonability

Now, take-on the regulator’s perspective (a.k.a.
Identifying common pitfalls)

Consistency or Reconciliation to Prior Filings
-
Overall rate level change
 - Coverage changes & estimated effects
 - Rating structure changes
 - Change in methodology
Consider Reasonability

Now, take-on the regulator’s perspective (a.k.a.
Identifying common pitfalls)
Establishing Territorial Relativities – things that
diminish the credibility of a territory

-
Creating “small” territories
 - Imposing narrow territorial swing limits
 - Competitors as the complement
Explore the Soundness of Data

Reconciliation – by the insurance company
Within the current filing
 With prior filings
 With other external data sources

Explore the Soundness of Data

Statistical Reports

NAII – Statistical Reports
 - Accuracy

& Timeliness
Fast Track Monitoring System (PPA)
-
Concerns with Pennsylvania PIP data
 - See letter reproduced on next slide…
Question & Answers
The end