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This entry was published on 2014-09-22
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Flexible rating for nonbusiness automobile insurance policies
Insurance (ISC) CHAPTER 28, ARTICLE 23
§ 2350. Flexible rating for nonbusiness automobile insurance policies.
(a) Except as provided in subsection (b) of this section, overall
average (for all coverages combined) rate level increases or decreases
of five percent above or below the insurer's rates in effect may take
effect without prior approval with respect to rates for policies
covering losses or liabilities arising out of the ownership of a motor
vehicle predominantly used for nonbusiness purposes, including
classification plans predominantly consisting of vehicles used for
nonbusiness purposes, when a natural person is the named insured under a
policy of automobile insurance.

(b) Notwithstanding any other provisions of this article, for any
policies governed by this section, filings that produce rate level
changes within the limitation specified in subsection (a) of this
section shall become effective without prior approval pursuant to
subsection (a) of section two thousand three hundred five of this
article, provided however (1) that no more than two rate increases the
total of which shall not exceed the limitation specified in subsection
(a) of this section may be implemented during any twelve month period;
and (2) no rate increase within the limitation specified in subsection
(a) of this section may be implemented until the onset of the new policy
period and unless the insurer, at least thirty but not more than sixty
days in advance of the end of the policy period, mails or delivers to
the named insured, at the address shown in the policy, a written notice
of its intention to change the rate. The specific reason or reasons for
the rate change shall be stated in or shall accompany the notice.

(c) The superintendent shall promulgate rules and regulations
implementing the provisions of this section.

(d) The superintendent shall monitor the degree and continued
existence of competition and the effectiveness of flexible rating in
this state on an on-going basis. In doing so, the superintendent shall
utilize the following standards or factors:

(1) the standards contained in section two thousand three hundred
eight of this article;

(2) existing relevant information, analytical systems and other
sources, or rely on some combination thereof;

(3) the number of insurers or group of affiliated insurers actively
engaged in providing coverage, taking into account the specialization
traditionally required for insurance in the particular rating territory;

(4) measures of market concentration and changes of market
concentration over time, which may include the use of
Herfindahl-Hirschman Index (HHI) and the United States Department of
Justice merge guidelines for an unconcentrated market ease of entry, and
the existence of financial or economical barriers that could prevent new
firms from entering the market;

(5) the extent to which any insurer or group of affiliated insurers
controls all or a dominant portion of the market has actively sought to
prevent competition;

(6) whether the total number of companies writing the line of
insurance in this state is sufficient to provide multiple options;

(7) the availability of insurance coverage to consumers;

(8) the opportunities available to consumers in the market to acquire
pricing and other consumer information; and

(9) any other factions relevant to inquiry.

Such activities may be conducted internally within the department, in
cooperation with other state insurance departments, through outside
contractors and/or in any other appropriate manner.