1.    A small employer carrier may establish a separate class of business only to reflect substantial differences in expected claims experience or administrative costs resulting from:

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a.    The small employer carrier using more than one type of system for the marketing and sale of health benefit plans to small employers.

    b.    The small employer carrier having acquired a class of business from another small employer carrier.

c.    The small employer carrier providing coverage to one or more association groups that meet the requirements set forth in rules adopted by the commissioner.

2.    A small employer carrier may establish up to nine separate classes of business under subsection 1.

3.    The commissioner may adopt rules to provide for a period of transition in order for a small employer carrier to come into compliance with subsection 2 if the small employer carrier acquires an additional class of business from another small employer carrier.

4.    The commissioner may approve the establishment of additional classes of business if the carrier applies to the commissioner and the commissioner determines that the action would enhance the efficiency and fairness of the small employer marketplace.