Connecticut General Statutes 38a-665 – Standards for the making and use of rates re commercial risk insurance
The following standards, methods and criteria shall apply to the making and use of rates pertaining to commercial risk insurance:
Terms Used In Connecticut General Statutes 38a-665
- Commissioner: means the Insurance Commissioner. See Connecticut General Statutes 38a-1
- Insurance: means any agreement to pay a sum of money, provide services or any other thing of value on the happening of a particular event or contingency or to provide indemnity for loss in respect to a specified subject by specified perils in return for a consideration. See Connecticut General Statutes 38a-1
- Insured: means a person to whom or for whose benefit an insurer makes a promise in an insurance policy. See Connecticut General Statutes 38a-1
- Person: means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a business trust, an unincorporated organization or other legal entity. See Connecticut General Statutes 38a-1
- Policy: means any document, including attached endorsements and riders, purporting to be an enforceable contract, which memorializes in writing some or all of the terms of an insurance contract. See Connecticut General Statutes 38a-1
- State: means any state, district, or territory of the United States. See Connecticut General Statutes 38a-1
(a) Rates shall not be excessive or inadequate, as herein defined, nor shall they be unfairly discriminatory. No rate shall be held to be excessive unless (1) such rate is unreasonably high for the insurance provided or (2) a reasonable degree of competition does not exist in the area with respect to the classification to which such rate is applicable. No rate shall be held inadequate unless (A) it is unreasonably low for the insurance provided, and (B) continued use of it would endanger solvency of the insurer, or unless (C) such rate is unreasonably low for the insurance provided and the use of such rate by the insurer using same has, or, if continued, will have the effect of destroying competition or creating a monopoly.
(b) Consideration shall be given, to the extent possible, to past and prospective loss experience within and outside this state, to conflagration and catastrophe hazards, to a reasonable margin for underwriting profit and contingencies, to past and prospective expenses both country-wide and those specially applicable to this state, to investment income earned or realized by insurers both from their unearned premium and loss reserve funds, and to all other factors, including judgment factors, deemed relevant within and outside this state and in the case of fire insurance rates, consideration may be given to the experience of the fire insurance business during the most recent five- year period for which such experience is available. Consideration may be given in the making and use of rates to dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers.
(c) 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 operating methods of any such insurer or group with respect to any kind of insurance, or with respect to any subdivision or combination thereof.
(d) Risks may be grouped by classifications for the establishment of rates and minimum premiums, provided no surcharge on any motor vehicle liability or physical damage insurance premium may be assigned for (1) any accident involving only property damage of one thousand dollars or less, or (2) the first accident involving only property damage of more than one thousand dollars which would otherwise result in a surcharge to the policy of the insured, within the experience period set forth in the insurer’s safe driver classification plan, or (3) any violation of section 14-219, unless such violation results in the suspension or revocation of the operator’s license under section 14-111b, or (4) less than three violations of section 14-218a within any one-year period, or (5) any accident caused by an operator other than the named insured, a relative residing in the named insured’s household, or a person who customarily operates the insured vehicle. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which provide for recognition of variations in hazards or expense provisions or both. Such rating plans may include application of the judgment of the insurer and may measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses.
(e) Each rating plan shall establish appropriate eligibility criteria for determining significant risks which are to qualify under the plan, provided all such plans shall include as an eligible significant risk the state of Connecticut or its instrumentalities. Rating plans which comply with the provisions of this subsection shall be deemed to produce rates which are not unfairly discriminatory.
(f) Notwithstanding the provisions of subsections (a) to (e), inclusive, of this section, no rate shall include any adjustment designed to recover underwriting or operating losses incurred out-of-state.
(g) The commissioner may adopt regulations in accordance with the provisions of chapter 54 concerning rating plans to effectuate the provisions of this section.