Sec. 161.1. Definitions

For the purposes of this Part, the following definitions shall apply:

(a) An ‘a’ rated risk means any insurance coverage for which rates are individually determined based upon judgment because neither a rate service organization, nor the insurer has yet established a manual rate based upon experience, except that if a rate service organization or the insurer acquires sufficient experience to establish, or the insurer itself has, a manual rate for such coverage, then such coverage shall no longer be considered an ‘a’ rated risk for such insurer.

(b) Base rate means the rate designed to reflect the average aggregate experience of a particular market, prior to adjustment for individual risk characteristics resulting from application of any rating plan.

(c) Commercial risk insurance has the meaning set forth in section 107(a)(47) of the Insurance Law.

(d) Commercial umbrella policy means a commercial liability insurance policy (except as modified by subdivisions [i] and [j] of this section) written as excess over underlying policies providing standard form general liability and motor vehicle liability insurance issued to and warranted to exist by the named insured, that include coverage limits of at least $300,000 in the aggregate for bodily injury liability, and $50,000 for property damage liability. With respect to losses not covered by underlying insurance, the policy shall require an insured's retention of risk, and be excess over, at least $10,000 per accident or occurence.

(e) A composite rating plan is any rating plan or system whereby the manual rates for a policy insuring general liability with several exposure bases for different liability coverages or insuring several different insurance exposures (such as automobile liability, general liability, burglary, glass, etc.) may be converted into one or more selected exposure bases (such as payroll or sales).

(f) An expense reduction plan is any rating plan or system whereby a base rate for property or liability insurance is reduced based upon a reduction in acquisition, underwriting or loss adjustment expenses associated with the risk.

(g) An experience rating plan is any rating plan or system whereby a base rate for liability insurance is adjusted or modified based on the actual past loss experience of the insured.

(h) A flexibility band or flex-band means the percentage range of rate level increases or decreases that an insurer may implement without the prior approval of the superintendent.

(i) High limits excess liability policy means any commercial liability policy, including a commercial umbrella policy, when written over:

(1) one or more underlying liability policies that in the aggregate provide primary coverage of at least $1 million; or

(2) a self-insured liability retention of at least $1 million.

(j) Hyper limits excess liability policy means any commercial liability policy, including a commercial umbrella policy, when written over:

(1) one or more underlying liability policies that in the aggregate provide primary or intermediate coverage of at least $5 million; or

(2) a self-insured liability retention of at least $5 million.

(k) An individual risk premium modification plan or IRPM plan is any rating plan or system whereby a base rate for property insurance is adjusted or modified based upon a schedule of debits and credits reflecting observable rating characteristics, not reflected in the base rate itself, expected to affect an individual insured's future loss exposure.

(l) Jumbo risk means a large business entity that generates gross revenues exceeding $100 million annually and that develops an annual comprehensive general liability premium of at least $500,000, but such term shall not include any public entity or not-for-profit corporation.

(m) Loss costs are that portion of a rate intended to represent the reasonably anticipated costs of claim payments and loss adjustment expenses associated with such claim payments. Loss costs do not include provisions for expenses (other than loss adjustment expenses) such as acquisition costs, overhead and taxes nor profit.

(n) A loss rating plan is any rating plan or system whereby the rates for particular insureds are based primarily upon the experience of the insured only, regardless of the experience of other insureds within the same market or related markets.

(o) A manual rate means a rate, designed to apply on a generic basis to similar risks within the same market, filed by an insurer or rate service organization with the department and made part of the rating manual used by an insurer or rate service organization.

(p) Market has the meaning set forth in section 2344(a)(1) of the Insurance Law.

(q) Package modifiers mean factors used to adjust monoline rates when two or more insurance coverages are combined in a single commercial multiple peril package policy.

(r) Pivot rate level means the rate level in effect 12 months prior to the effective date of a rate revision filed under flex-rating.

(s) Professional liability insurance has the meaning set forth in section 107(a)(49) of the Insurance Law.

(t) Public entity has the meaning set forth in section 107(a)(51) of the Insurance Law.

(u) Public entity insurance has the meaning set forth in section 107(a)(50) of the Insurance Law.

(v) Rate has the meaning set forth in section 2344(a)(2) of the Insurance Law, whether developed independently by an insurer or rate service organization, adopted by an insurer in whole from a rate service organization or consisting of loss costs adopted by an insurer from a rate service organization combined with the insurer's independently developed expense and profit components.

(w) Rate level means the average rate charged by an insurer on its distribution of risks for a given market.

(x) Rate service organization has the meaning set forth in section 2313(a) of the Insurance Law.

(y) Renewal means the issuance or offer to issue by an insurer of a policy superseding a policy previously issued and delivered by the same insurer, or another insurer within the same group or under common management.

(z) A retrospective rating plan means a rating plan or system whereby the premium payable by an individual insured is subject to a contractual adjustment after policy expiration based upon actual loss experience, compared to projected loss experience, for the policy term.

(aa) A schedule rating plan is any rating plan or system whereby a base rate for liability insurance is adjusted or modified based upon a schedule of debits and credits reflecting observable rating characteristics, not reflected in the base rate itself, expected to affect an individual insured's future loss exposure.

(bb) Special risk insurance has the meaning set forth in Part 16 of this Title (Regulation 86), dealing with the free trade zone.

(cc) An authorized insurer shall have the meaning set forth in section 107(a)(10) of the Insurance law.