Sec. 161.11. Flex-rating submissions

(a) Under the flex-rating system, insurers must supply adequate support for all rate changes, whether or not prior approval is required, including class and territorial changes and effects. Although meeting competition is an important motivating factor in rate changes, the dimensions of all such changes must be justified. In the event that a rate change beyond the applicable flex-band is sufficiently justified by an insurer, prior approval will be granted. If the need for rate relief can be demonstrated, a rate filing should be made.

(b) All flex-rating changes must be statistically or judgmentally supported. Wherever possible, the insurer or rate service organization shall provide statistical support for the rate change, including incurred losses and loss adjustment expense data, on reported and unreported and outstanding and paid categories. When data are not available, or volume is so low as to lack credibility, data bearing upon a larger or related market, or upon the experience of other insurers in the same market, should be supplied. If the rate change is based upon judgment, the key factors in forming that judgment must be identified and explained.

(c) The superintendent may request additional information in support of a filing, even if the rate change is within the applicable flex-band. If prior approval is required because a proposed rate change exceeds the flex-band, a properly supported rate filing shall be deemed approved unless disapproved by the superintendent within 30 days, which the superintendent may with cause extend an additional 30 days and with further cause extend an additional 15 days, in accordance with section 2344(d) of the Insurance Law.

(d) In order to expedite the flex-rating review process, in filing rate change submissions, insurers must use the appropriate forms prescribed by the superintendent, responding by affirmation of a responsible officer as fully as possible to the interrogatories therein, and shall contain, wherever appropriate and whenever feasible, the following supporting information:

(1) paid and outstanding loss and allocated loss adjustment expense experience, on New York and countrywide bases;

(2) premiums earned, exposure base and type of coverage (e.g., occurrence or claims-made, deductibles, key endorsements and exclusions, liability limits, defense cost treatment);

(3) trend and development factors and indications, including the basis for such factors and indications; and

(4) factors considered, where the rate filed is based upon judgment, in exercising such judgment.