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Chuck Romberger, ACAS, CPCU, ARM

Casualty Actuarial Society Seminar on Ratemaking March 7 - 9, 2007 REG-1: “Regulatory Roundtable Discussion”. Chuck Romberger, ACAS, CPCU, ARM. Pennsylvania. Statutory Rate Filing Requirements Climate, Process, “Hot” Issues Potential Legislation. Statutory Rate Filing Requirements.

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Chuck Romberger, ACAS, CPCU, ARM

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  1. Casualty Actuarial SocietySeminar on RatemakingMarch 7 - 9, 2007REG-1: “Regulatory Roundtable Discussion” Chuck Romberger, ACAS, CPCU, ARM

  2. Pennsylvania • Statutory Rate Filing Requirements • Climate, Process, “Hot” Issues • Potential Legislation

  3. Statutory Rate Filing Requirements • Personal Auto • Homeowners • Workers Compensation • Medical Malpractice & Other Commercial

  4. Statutory Rate Filing Requirements • Personal Auto • Prior Approval • Review period: 60 days + 30 by extension • Exception: T.31 Ch. 130 (Pers. Auto & HO) • Promotes competition • Permits certain decreases in currently approved rates • Decreases up to 10% either by coverage or line of ins. • “File-and-Use” treatment

  5. Statutory Rate Filing Requirements • Homeowners • Prior Approval • Review period: 30 days + 30 by extension • Exception: T.31 Ch. 130 (Pers. Auto & HO) • (details not repeated – see Personal Auto slide)

  6. Statutory Rate Filing Requirements • Workers Compensation • Insurer filings • LCMs: file-and-use (30-day waiting period) • Others: prior approval (30 days + 150 days by ext.) • Exs. large deductible, sub-classifications,… • Rating organization filings • Prior approval (30 days + 150 days by extension) • Must annually file loss cost revisions & insurers must adopt on the date approved (usually April 1st)

  7. Statutory Rate Filing Requirements • Medical Malpractice & Other Com’l (1 of 2) • Large Commercial Risks • No filing requirement! • JUA & Assigned Risks • Prior approval • Review period: 45 days + 45 days by extension

  8. Statutory Rate Filing Requirements • Medical Malpractice & Other Com’l (2 of 2) • Small commercial risks • Prior approval: initial rates & changes >10% in agg. • Review period: 45 days + 45 days by extension • File-and-Use: changes 10% or less in agg. • Waiting period: 45 days • Use-and-File: rates for individual insureds (25%) • File within 30 days of effective date

  9. Statutory Rate Filing Requirements • For additional information on Pennsylvania’s filing requirements, please see our website at: http://www.ins.state.pa.us/ins/cwp/view.asp?a=1280&Q=545457 Or e-mail me: cromberger@state.pa.us

  10. Climate, Process, “Hot” Issues • Personal Auto • Top 20 writers are requested to provide extensive data for Department analysis • Department considers rate indications at a level between statewide & company rating territories for all companies • We frequently see Phila. indications below R.O.S., consistent w/ ISO & PCI Stat Data

  11. Climate, Process, “Hot” Issues • Homeowners • Top 20 writers are requested to provide additional data for Department analysis • Department closely monitors any potential reductions in coverage or limits

  12. Climate, Process, “Hot” Issues • Personal Auto & Homeowners • Non-Traditional Rating Approaches (1 of 2) • More tiers & rating territories • Rating territories varying by coverage • Complex rating variables & algorithms • New & unusual characteristics being considered • Ex. number of flower shops per area or home improvement stores sales per area…

  13. Climate, Process, “Hot” Issues • Personal Auto & Homeowners • Non-Traditional Rating Approaches (2 of 2) • Main concerns • Renewal impacts (conflicts with our laws & regulations) • Fairness, accuracy and potential disparate impacts

  14. Climate, Process, “Hot” Issues • Workers Compensation • Companies are required to adopt bureau loss costs on the date approved by the Department • Companies can modify LCMs at any time

  15. Climate, Process, “Hot” Issues • Medical Malpractice & Other Com’l • 2007 Med Mal Capacity Study is underway • Limits are currently $500,000/$1,500,000 • Comm. didn’t find sufficient capacity in 2005 • Physician & Surgeon rates have not changed much since 2005 • Many new writers in the market in the last 5 years • 7 domestics, 6 foreign, 2 surplus lines, & 38 RRGs

  16. Potential Legislation • Personal Auto – HB 34 (2007) • (A change to “plain language”?) • Amend “tort” to “right to sue” • Increase the minimum limits under the MVFRL • From 15/30/5/5 to 25/50/10/10 • Require stacked UM/UIM @ BI limits • Require an extensive “menu” of coverage options • Possibly require Comp & Coll

  17. Potential Legislation • Credit / Insurance Scoring – HB 94 (2007) • Legislative proposals are submitted on this topic almost annually in Pennsylvania. • Scoring is not directly addressed in our law… currently. • Underwriting guidelines/practices do not required our prior review and/or approval. • We have not approved a personal lines rate/rule filing that contains credit scoring.

  18. Questions???

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