LAW
Writer®
Ohio Laws and Rules
(A) Purpose
Risk and expense modification proposals for individual risks in the multiple peril policies, fire and allied lines, inland marine, and fidelity, are of recent origin. Some fundamental differences are present in the treatment of property as distinguished from casualty lines of insurance. As one example, frequency of loss is generally much greater in casualty than in property lines, but the severity of loss is generally much greater in property insurance. This fundamental factor is a major reason for applying different minimum premium criteria in filings for lines other than the accepted and proven casualty insurance filings.
(B) Existing Rule Superseded
This rule supersedes existing Department of Insurance Rule IN-35-01, effective May 25, 1967.
(C) Specifications
Every filing for individual risk premium modification must contain satisfactory specifications of factors or elements to be applied to risk modification and expense modification. They shall not duplicate any factor or element already reflected in the basic premium or rates.
(D) Minimum Premium Criteria
The following minimum criteria will hereafter be applied in the approval or disapproval of individual risk premium modification filings, and rules for applying them:
(1) Fidelity and Surety
(a) Minimum premium criteria for fidelity and surety insurance not written as part of a multi-peril package policy, automobile liability, automobile physical damage, general liability, burglary, glass and boiler and machinery rating plans shall remain as presently filed.
(b) Minimum premium criteria for fidelity and surety insurance written as part of a multi-peril package policy shall be $500 for three years for risk modification and for expense modification shall be $500 for three years.
(2) Fire and Allied Lines
Minimum premium criteria for fire and allied lines insurance shall be $500 for three years for risk modification and for expense modification shall be $500 for three years.
(3) Inland Marine
Minimum premium criteria for inland marine insurance shall be $500 for three years for risk modification and for expense modification shall be $500 for three years.
(4) Multi-Peril
Minimum premium criteria for multi-peril insurance coverage shall be $500 for three years for risk modification and for expense modification shall be $500 for three years (automobile coverage shall not be included in multi-peril coverage for the purpose of calculating minimum premium).
(E) Maximum Debit and Credit
For the purpose of calculating risk modification, a limit of 25% maximum debit and credit shall be applied to the rate.
(F) Risk Modification
“Risk Modification” (commonly known as schedule rating in casualty insurance), means the application of controlled debits and credits to the risk rate or premium which has been developed through use of a base rate or class rate and modified by experience rating plans, multiple location rating plans, package discounts where applicable, and other similar approved rating plans. No risks or expense modification shall apply to any multi-peril policy unless the minimum premium criteria are met.
(G) Account Minimums
The minimums used herein refer to the account. If more than one company writes a policy for a part interest, the minimum shall apply to the total interest, not each separate policy.
(H) Total Premium Modified
When an account is eligible for risk and expense modification, the total premium of the account shall be modified, not just the amount in excess of the minimum. However, the application of credits under the plan shall not reduce the premium as modified, below the minimum requirements.
(I) Duplication of Credits
Risk modification shall not be used on any factor or element already considered in the application of a specific rating procedure or which is fully reflected in the basic premium or rates.
(J) Applicable to All Risks
Individual risk premium modification plans must be applied to all risks which are eligible.
(K) Inspection Required
No risk shall be modified except after inspection of the property by a company or bureau representative and the debits or credits applicable shall be determined only by a company or bureau representative.
(L) Supporting Data
The bureau or company shall retain adequate supporting data, including copies of inspection reports which shall be made available for examination upon notice from the Department of Insurance.
(M) Statistics
As a condition to continuance of individual risk premium modification plans, each filer shall maintain complete statistics so that the Department of Insurance may determine from the filer’s experience whether or not minimum premium criteria shall be adjusted upward or downward in the future; such experience statistics shall be supplied to the Department of Insurance upon its request.
(N) Suspension or Revocation
The Superintendent of Insurance may suspend, revoke, or refuse to renew the license of any insurance company found to be in violation of the provisions set forth in this rule. Such suspension, revocation, or refusal to renew shall be in addition to, not substitution for, other penalties provided in the Insurance Code of Ohio.
(O) Effective Date
This rule shall take effect on the 10thday of July, 1973.
R.C. 119.032 review dates: 12/27/2007 and 12/27/2012
Promulgated Under: 119.03
Statutory Authority: 3901.041
Rule Amplifies: 3935.04, 3937.03
Prior Effective Dates: 7/10/1973