Arizona Laws 20-1621.05. Reasonableness of benefits in relation to premium charged
A. An insurer’s premium rates shall be reasonable in relation to the benefits provided and shall not be excessive, inadequate or unfairly discriminatory.
Terms Used In Arizona Laws 20-1621.05
- Compensation: means commission, service fee, brokerage or any other valuable consideration that is paid to a person as a result of the sale of credit insurance. See Arizona Laws 20-1621.01
- Credit property insurance: means a policy of insurance that covers perils to goods purchased through a credit transaction or used as collateral for a credit transaction and that concerns a creditor's interest in the purchased goods or pledged collateral either in whole or in part. See Arizona Laws 20-1621.01
- Creditor: means the lender of money or the vendor or lessor of goods, services, property, rights or privileges for which payment is arranged through a credit transaction, or any successor to the right, title or interest of a lender, vendor or lessor and an affiliate, associate or subsidiary of any of them, any director, officer or employee of any of them or any person in any way associated with any of them. See Arizona Laws 20-1621.01
- Experience: means earned premiums and incurred losses during the experience period. See Arizona Laws 20-1621.01
- including: means not limited to and is not a term of exclusion. See Arizona Laws 1-215
- Loss ratio: means incurred losses divided by the sum of earned premiums. See Arizona Laws 20-1621.01
- Property: includes both real and personal property. See Arizona Laws 1-215
B. At least once every three years, the director shall establish by order a loss ratio standard. In establishing the loss ratio standard, the director shall consider the standard prescribed in subsection A of this section and the actual and expected loss experience of insurers, including a reasonable catastrophe provision. The director shall also consider other rate components, including reasonable general and administrative expenses, reasonable acquisition expenses, reasonable creditor compensation, investment income, premium taxes, licenses, fees, assessments and reasonable underwriting profit and contingencies.
C. Concurrently with the establishment of a loss ratio standard pursuant to subsection B of this section, the director, by order, shall establish prima facie rates. If an insurer’s actual rates do not exceed the prima facie rates, the insurer’s rates are presumed not to be excessive and the insurer is not required to file its rates with the director, subject to the following:
1. On or before April 1 of each year, on a form prescribed by the director, the insurer shall certify to the director that the rates currently applied by the insurer do not exceed the prima facie rates and that the rates are not inadequate or unfairly discriminatory. The insurer shall also state the actual rates then in effect. If the insurer changes the rates before the next April 1, the insurer shall file an amended certification with the director.
2. At any time the director may require the insurer to make rate filings according to Section 20-1621.04.
D. The reasonable cost of actuarial or other professional services necessary to perform the duties required by this section are chargeable as examination expenses pursuant to section 20-159 and shall be allocated among insurers transacting credit property insurance or credit unemployment insurance in this state in proportion to the relative amounts of combined direct credit property and credit unemployment insurance premiums received in this state for the calendar year immediately before the date of the director’s order pursuant to this section.