Sec. 38a-688. (Formerly Sec. 38-201x). Review of rates re personal risk insurance and residual markets in competitive or noncompetitive markets.
Sec. 38a-688. (Formerly Sec. 38-201x). Review of rates re personal risk insurance and residual markets in competitive or noncompetitive markets. (a) The following procedures shall apply with respect to rates pertaining to personal risk insurance
and residual markets:
(1) In a competitive market, every insurer shall file with the commissioner all rates
and supplementary rate information to be used in this state, provided that such rates and
information 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. No such filings may
be made by a rating organization on behalf of any insurer. Such rates and supplementary
rate information shall be filed by the effective date of the filing or the date that premium
billing notices reflecting the new rates are sent to insureds or agents, whichever is earlier.
In a competitive market, if the commissioner finds, after a hearing, that an insurer's
rates require closer supervision because of the insurer's financial condition or unfairly
discriminatory rating practices, the insurer shall file with the commissioner at least thirty
days before the effective date, all such rates and such supplementary rate information
and supporting information as prescribed by the commissioner. Upon application by
the filer, the commissioner may authorize an earlier effective date for the filing.
(2) In a noncompetitive market, every insurer shall file with the commissioner all
rates and supplementary rate information for that market and such supporting information as is required by the commissioner. For purposes of subsection (d) of section 7-479e,
sections 38a-341, 38a-387, 38a-665, subsection (b) of section 38a-672, and sections
38a-673, 38a-675, 38a-676 and 38a-686 to 38a-694, inclusive, residual markets, title
insurance and credit property insurance are deemed to be noncompetitive markets. All
rates and supplementary rate information and such supporting information as is required
by the commissioner, shall also be filed with the commissioner for insurance provided
pursuant to section 38a-328, 38a-329 or 38a-670. Such rates and supplementary rate
information and supporting information required by the commissioner shall be on file
with the commissioner for a waiting period of thirty days before it becomes effective,
which period may be extended by the commissioner for an additional period not to
exceed thirty days if the commissioner gives written notice within such waiting period
to the insurer or rating organization which made the filing that the commissioner needs
such additional time for the consideration of such filing. Upon written application by
such insurer or rating organization, the commissioner may authorize a filing which the
commissioner has reviewed to become effective before the expiration of the waiting
period or any extension thereof. A filing shall be deemed to meet the requirements of
sections 38a-663 to 38a-696, inclusive, unless disapproved by the commissioner within
the waiting period or any extension thereof. If, within the waiting period or any extension
thereof, the commissioner finds that a filing does not meet the requirements of sections
38a-663 to 38a-696, inclusive, the commissioner shall send to the insurer or rating
organization which made such filing written notice of disapproval of such filing, specifying therein in what respects the commissioner finds such filing fails to meet the requirements of sections 38a-663 to 38a-696, inclusive, and stating that such filing shall not
become effective. Such finding of the commissioner shall be subject to review as provided in section 38a-19.
(3) An insurer may file rates by reference, with or without deviation, to rates charged
by another insurer which were filed and are in effect if the insurer's direct written premium for the applicable line of insurance is less than one-half of one per cent of the
total state-wide direct written premium for that line, as determined from the annual
statements filed by insurers licensed to do business in this state and as calculated by
the National Association of Insurance Commissioners from its data base. Supporting
information shall not be required for rates filed by reference pursuant to this subsection.
For purposes of this subdivision the term "insurer" shall include two or more admitted
insurers having a common ownership or operating in this state under common management or control.
(4) Rates filed pursuant to this section shall be filed in such form and manner as is
prescribed by the commissioner. Whenever a filing made pursuant to subdivision (1)
or (2) of subsection (a) of this section is not accompanied by the information upon
which the insurer supports such filing and the commissioner does not have sufficient
information to determine whether such filing meets the requirements of sections 38a-663 to 38a-696, inclusive, the commissioner shall require such insurer to furnish the
information upon which it supports such filing and in such event the waiting period
shall commence as of the date such information is furnished. The information furnished
in support of a filing may include (A) the experience or judgment of the insurer making
the filing, (B) its interpretation of any statistical data it relies upon, (C) the experience
of other insurers, or (D) any other relevant factors.
(5) All rates, supplementary rate information and any supporting information for
risks filed under subsection (d) of section 7-479e, sections 38a-341, 38a-387, 38a-665,
subsection (b) of section 38a-672, and sections 38a-673, 38a-675, 38a-676 and 38a-686
to 38a-694, inclusive, shall, as soon as filed, be open to public inspection at any reasonable time. Copies may be obtained by any person on request and upon payment of a
reasonable charge.
(b) Rates for insurance described in subsection (a) of this section shall be subject
to review as follows:
(1) Rates subject to prefiling under subdivision (1) or (2) of subsection (a) of this
section may be reviewed and disapproved before their effective date, except that rates
for insurance provided pursuant to section 38a-328, 38a-329 and 38a-670 shall not be
effective until approved by the commissioner. Any rate may be reviewed and disapproved subsequent to its effective date.
(2) The commissioner may disapprove a rate if the insurer fails to comply with the
filing requirements of this section. The commissioner shall disapprove a rate for use in
a competitive market if he finds that the rate is inadequate or unfairly discriminatory
under subsection (a) of section 38a-686. The commissioner shall disapprove a rate for
use in a noncompetitive or residual market if he finds the rate is excessive, inadequate
or unfairly discriminatory under subsection (a) of section 38a-686.
(3) If the commissioner finds that a reasonable degree of competition does not exist
in a market in accordance with section 38a-687, he may require that the insurers in that
market file supporting information with respect to existing rates. If the commissioner
believes that such rates may violate any of the requirements of subsection (d) of section 7-479e, sections 38a-341, 38a-387, 38a-665, subsection (b) of section 38a-672, or sections
38a-673, 38a-675, 38a-676, or 38a-686 to 38a-694, inclusive, he may proceed as provided in section 38a-678. If the commissioner believes that rates in a competitive market
violate the inadequacy or unfair discrimination standards in section 38a-686 or any other
applicable requirement of subsection (d) of section 7-479e, section 38a-341, 38a-387,
38a-665, subsection (b) of section 38a-672, or sections 38a-673, 38a-675, 38a-676, or
38a-686 to 38a-694, inclusive, he may require the insurers in that market to file supporting information with respect to existing rates. If after reviewing the supporting information, the commissioner continues to believe that such rates may violate these requirements, he may proceed as provided in section 38a-678. The commissioner may
disapprove, without hearing, rates prefiled pursuant to subdivision (1) or (2) of subsection (a) of this section that have not become effective, provided that the insurer whose
rates have been disapproved shall be given a hearing pursuant to section 38a-19.
(4) If the commissioner disapproves a rate, he shall issue an order specifying the
respects in which it fails to meet the requirements of subsection (d) of section 7-479e,
section 38a-341, 38a-387, 38a-665, subsection (b) of section 38a-672, and sections 38a-673, 38a-675, 38a-676, and 38a-686 to 38a-694, inclusive. For rates in effect at the time
of the disapproval, the commissioner shall state, within a reasonable period of time,
when the further use of such rate in contracts of insurance made thereafter shall be
prohibited. The order shall be issued within thirty days after the hearing or within such
reasonable time extension as the commissioner may determine. Such order may include
a provision for premium adjustment for the period after the effective date of the order
for policies in effect on such date.
(5) Whenever an insurer has no legally effective rates as a result of the commissioner's disapproval of rates or other act, the commissioner shall specify interim rates. Upon
appeal from any such order of the commissioner the court may, upon request of the
appealing insurer, stay such order, provided that the insurer places in an escrow account
the difference, as received, between the disapproved rates and the interim rates specified
by the commissioner. When new rates become legally effective, the commissioner shall
order the escrowed funds to be distributed appropriately, with interest at the legal rate
as provided in section 37-1, except that minimal refunds to policyholders are not required
to be distributed.
(P.A. 82-353, S. 11, 26; P.A. 92-60, S. 21; P.A. 93-297, S. 16, 29; P.A. 01-174, S. 17.)
History: P.A. 82-353, S. 11, effective July 1, 1983; Sec. 38-201x transferred to Sec. 38a-688 in 1991; P.A. 92-60 made
technical corrections for statutory consistency; P.A. 93-297 deleted references to repealed Sec. 38a-386, effective January
1, 1994, and applicable to acts or omissions occurring on or after said date; P.A. 01-174 amended Subsec. (a)(2) and (4)
to substitute references to Sec. 38a-696 for Sec. 38a-697 and make technical changes, including changes for the purpose
of gender neutrality.
See Sec. 38a-676 re review of rating plans and rules and form of commercial risk insurance contracts.