Rates shall not be unfairly discriminatory. Rates are unfairly discriminatory if, after allowing for practical limitations, price differentials fail to reflect equitably the difference in expected losses and expenses. A rate of an insurer shall not be deemed unfairly discriminatory because different premiums result for policyholders with like loss exposures but different expenses, or like expenses but different loss exposures, as long as the rate reflects the differences with reasonable accuracy.

(Added by Stats. 1994, Ch. 732, Sec. 1. Effective January 1, 1995.)

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Terms Used In California Insurance Code 11732.5

  • Expenses: means that portion of any rate attributable to acquisition, field supervision, collection expenses, general expenses, taxes, licenses, and fees. See California Insurance Code 11730
  • Rate: means the cost of insurance per exposure base unit, prior to any application of individual risk variations based on loss or expenses considerations and does not include minimum premiums. See California Insurance Code 11730
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