§ 58-36-10. Method of rate making; factors considered.
§ 58‑36‑10. Method of rate making; factors considered.
The following standards shallapply to the making and use of rates:
(1) Rates or loss costsshall not be excessive, inadequate or unfairly discriminatory.
(2) Due considerationshall be given to actual loss and expense experience within this State for themost recent three‑year period for which that information is available; toprospective loss and expense experience within this State; to the hazards ofconflagration and catastrophe; to a reasonable margin for underwriting profitand to contingencies; to dividends, savings, or unabsorbed premium depositsallowed or returned by insurers to their policyholders, members, orsubscribers; to investment income earned or realized by insurers from theirunearned premium, loss, and loss expense reserve funds generated from businesswithin this State; to past and prospective expenses specially applicable tothis State; and to all other relevant factors within this State: Provided,however, that countrywide expense and loss experience and other countrywidedata may be considered only where credible North Carolina experience or data isnot available.
(3) In the case ofproperty insurance rates under this Article, consideration may be given to theexperience of property insurance business during the most recent five‑yearperiod for which that experience is available. In the case of propertyinsurance rates under this Article, consideration shall be given to theinsurance public protection classifications of fire districts established bythe Commissioner. The Commissioner shall establish and modify from time to timeinsurance public protection districts for all rural areas of the State and forcities with populations of 100,000 or fewer, according to the most recent annualpopulation estimates certified by the State Budget Officer. In establishing andmodifying these districts, the Commissioner shall use standards at leastequivalent to those used by the Insurance Services Office, Inc., or anysuccessor organization. The standards developed by the Commissioner are subjectto Article 2A of Chapter 150B of the General Statutes. The insurance publicprotection classifications established by the Commissioner issued pursuant tothe provisions of this Article shall be subject to appeal as provided in G.S.58‑2‑75, et seq. The exceptions stated in G.S. 58‑2‑75(a)do not apply.
(4) Risks may be groupedby classifications and lines of insurance for establishment of rates, losscosts, and base premiums. Classification rates may be modified to produce ratesfor individual risks in accordance with rating plans that establish standardsfor measuring variations in hazards or expense provisions or both. Thosestandards may measure any differences among risks that can be demonstrated to havea probable effect upon losses or expenses. The Bureau shall establish andimplement a comprehensive classification rating plan for motor vehicleinsurance under its jurisdiction. No such classification plans shall base anystandard or rating plan for private passenger (nonfleet) motor vehicles, inwhole or in part, directly or indirectly, upon the age or gender of the personsinsured. The Bureau shall at least once every three years make a completereview of the filed classification rates to determine whether they are properand supported by statistical evidence, and shall at least once every 10 yearsmake a complete review of the territories for nonfleet private passenger motorvehicle insurance to determine whether they are proper and reasonable.
(5) In the case ofworkers' compensation insurance and employers' liability insurance written inconnection therewith, due consideration shall be given to the past andprospective effects of changes in compensation benefits and in legal andmedical fees that are provided for in General Statutes Chapter 97.
(6) To ensure thatpolicyholders in the beach and coastal areas of the North Carolina InsuranceUnderwriting Association whose risks are of the same class and essentially thesame hazard are charged premiums that are commensurate with the risk of lossand premiums that are actuarially correct, the North Carolina Rate Bureau shallrevise, monitor, and review the existing territorial boundaries used by theBureau when appropriate to establish geographic territories in the beach andcoastal areas of the Association for rating purposes. In revising theseterritories, the Bureau shall use statistical data sources available to definesuch territories to represent relative risk factors that are actuarially soundand not unfairly discriminatory. The new territories and any subsequentamendments proposed by the North Carolina Rate Bureau or Association shall besubject to the Commissioner's approval and shall appear on the Bureau's Website, the Association's Web site, and the Department's Web site once approved. (1977, c. 828, s. 6; 1979,c. 824, s. 1; 1981, c. 521, s. 5; c. 790; 1987, c. 632, s. 1; 1991, c. 644, s.39; 1999‑132, s. 3.3; 2000‑176, s. 1; 2004‑203, s. 5(a); 2009‑472,s. 2.)