(a)General. Rates:

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Terms Used In Tennessee Code 56-5-103

  • Advisory prospective loss costs: means historical aggregate losses and loss adjustment expenses projected through development to their ultimate value and through trending to a future point in time. See Tennessee Code 56-5-102
  • Rate: includes advisory prospective loss costs. See Tennessee Code 56-5-102
(1) Shall not be excessive, inadequate or unfairly discriminatory; or
(2) In the case of an advisory prospective loss costs filing, shall reasonably reflect projected losses and loss adjustment expenses.
(b)Excessiveness. A rate is excessive if it is likely to produce a profit that is unreasonably high for the insurance provided or if the expense provision included in the rate is unreasonably high in relation to the services rendered.
(c)Inadequacy. A rate is not inadequate unless the rate is clearly insufficient to sustain projected losses and expenses in the class of business to which it applies and the use of the rate has or, if continued, will have the effect of substantially lessening competition or the tendency to create a monopoly.
(d)Unfair Discrimination. Unfair discrimination exists if, after allowing for practical limitations, price differentials fail to reflect equitably the differences in expected losses and expenses. A rate is not unfairly discriminatory because different premiums result for policyholders with like loss exposures with different expenses, or like expenses but different loss exposures, so long as the rate reflects the differences with reasonable accuracy.
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