MISSISSIPPI LEGISLATURE

1998 Regular Session

To: Insurance

By: Senator(s) Hewes

AN ACT TO AMEND SECTION 83-2-3, MISSISSIPPI CODE OF 1972, TO REVISE THE STANDARDS APPLICABLE TO RATES OF PROPERTY AND CASUALTY INSURANCE; TO AMEND SECTION 83-2-7, MISSISSIPPI CODE OF 1972, TO REVISE THE FILING REQUIREMENTS OF RATES AND RELATED INFORMATION BY INSURERS TO THE COMMISSIONER OF INSURANCE; AND FOR RELATED PURPOSES. 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 83-2-3, Mississippi Code of 1972, is amended as follows:

83-2-3. (1) Rates shall comply with the following standards:

(a) Rates shall not be excessive, inadequate or unfairly discriminatory.

(b) 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 therein is unreasonably high in relation to the services rendered.

(c) A rate is inadequate if it threatens the solvency of the insurance company or tends to create a monopoly.

(d) 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.

(2) In determining whether rates comply with the standards set forth in subsection (1), the following criteria shall apply:

(a) Due consideration shall be given to past and prospective loss and expense experience within and outside this state; to catastrophe hazards; to any residual market loss redistributions and other similar obligations; to a reasonable provision for profit and contingencies; to trends within and outside this state; to loadings for leveling premium rates over a reasonable period of time or for dividends or savings to be allowed or returned by insurers to their policyholders, members or subscribers; and to all other relevant factors, including the judgment of the filer.

(b) Risks may be classified in any reasonable way for the establishment of rates except that no risks may be grouped by classifications based in whole or in part on race, color, creed, or national origin of the risk. Rates may be modified for individual risks in accordance with rating plans or schedules which provide for recognition of probable variations in hazards, expenses or both.

(c) The systems of expense provisions included in rates for use by an insurer or group of insurers may differ from those of other insurers or group of insurers to reflect the operating methods of such insurer or group with respect to any kind of insurance, or with respect to any subdivision or combination thereof.

(d) The level and intensity of competition among insurers writing that particular line of insurance and the effect of such competition in regulating rates and types of insurance coverage available.

SECTION 2. Section 83-2-7, Mississippi Code of 1972, is amended as follows:

83-2-7. (1) Except as provided in Section 83-2-9 and subsection (2) of this section, every insurer shall file with the commissioner all rates, supplementary rate information, policy forms and endorsements at least thirty (30) days prior to the proposed effective date which shall be stated in the filing. Rates, supplementary rate information, policy forms and endorsements need not be filed for inland marine risks which by general custom of the business are not written according to manual rules or rating plans. Rates, supplementary rate information, policy forms and endorsements need not be filed for commercial insurance risks. However, rates, supplementary rate information, policy forms and endorsements for commercial insurance shall be maintained by the insurance or surety company and filed with the commissioner upon request. Such commercial insurance rates, supplementary rate information policy forms and endorsements may be disapproved by the commissioner if violative of Section 83-2-3. For purposes of the section, commercial insurance is defined as insurance policies, bonds or contracts whose primary purpose is insuring a business of any kind rather than risks of primarily a personal or household nature. A policy of insurance or surety bond shall be presumed to be a commercial insurance policy if any named insured is a corporation, limited partnership, partnership, limited liability corporation or sole proprietorship other than a lending institution which is named as an insured due to a mortgage or other security interest or the annual premium is in excess of Ten Thousand Dollars ($10,000.00). Upon the request of the commissioner, supporting information shall also be filed. Any filing made under this section is deemed to be approved unless disapproved by the Commissioner of Insurance within thirty (30) days after the date of filing.

(2) A filing of adjustments of rates for existing rating systems made under this section which does not involve a change in the relationship between such rates and the expense portion thereof or does not involve a change of the element of expenses which are paid as a percentage of premiums and does not involve a change in rate relativities among such classifications on any basis other than loss experience is effective on the date specified in the filing which shall not be less than thirty (30) days after the filing is made and shall be deemed to meet the requirements of this chapter.

Within thirty (30) days after receiving a filing, the commissioner may issue an order which delays the effective date of a filing under this section for not more than thirty (30) days after the date the order is issued if (a) the filing does not conform to generally accepted actuarial procedures; or (b) the amount of the rate adjustment is not justified by the supporting information. A delay order under this subsection shall specifically set forth the objections of the commissioner. The filing party may submit a corrected filing or supplemental information as appropriate. In the event that a corrected filing or supplemental information is not submitted, the filing is deemed to be withdrawn.

(3) No insurance company shall make or issue a contract or policy except in accordance with filings made with the commissioner, if such filings are required.

(4) The Commissioner of Insurance may, upon a finding that competition is adequate in a line of property and casualty insurance or surety bonds, may exempt such line of insurance and the rates, supplementary rate information, policy forms and endorsements from the filing and approval provisions of this section. The commissioner may require that such information be filed with the commissioner upon request and may disapprove such rates, supplementary rate information, policy forms and endorsements if they are violative of Section 83-2-3.

SECTION 3. This act shall take effect and be in force from and after July 1, 1998.