§ 58-36-100. Prospective loss costs filings and final rate filings for workers' compensation and employers' liability insurance.
§ 58‑36‑100. Prospective loss costs filings and final rate filings for workers' compensationand employers' liability insurance.
(a) Except as providedin subsections (k) and (m) of this section, the Bureau shall no longer developor file any minimum premiums, minimum premium formulas, or expense constants.If an insurer wishes to amend minimum premium formulas or expense constants, itmust file the minimum premium rules, formulas, or amounts it proposes to use. Acopy of each filing submitted to the Commissioner under subsections (e) and (g)of this section shall also be sent to the Bureau.
(b) Definitions. Asused in this section, the following terms have the following meanings:
(1) "Expenses". That portion of a rate attributable to acquisition, field supervision,collection expenses, any tax levied by the State or by any politicalsubdivision of the State, licensing costs, fees, and general expenses, asdetermined by the insurer.
(2) "Developedlosses". Losses (including loss adjustment expenses) adjusted, usingstandard actuarial techniques, to eliminate the effect of differences betweencurrent payment or reserve estimates and those needed to provide actualultimate loss (including loss adjustment expense) payments.
(3) "Insurer". A member insurer or group.
(4) "Losstrending". Any procedure for projecting developed losses to the averagedate of loss for the period during which the policies are to be effective.
(5) "Multiplier". An insurer's determination of the expenses, other than loss expense and lossadjustment expense, associated with writing workers' compensation andemployers' liability insurance, which shall be expressed as a singlenonintegral number to be applied equally and uniformly to the prospective losscosts approved by the Commissioner in making rates for each classification ofrisks utilized by that insurer.
(6) "Prospectiveloss costs". That portion of a rate that does not include provisions forexpenses (other than loss adjustment expenses) or profit; and that are based onhistorical aggregate losses and loss adjustment expenses adjusted throughdevelopment to their ultimate value and projected through trending to a futurepoint in time.
(7) "Rate". The cost of insurance per exposure unit, whether expressed as a single numberor as a prospective loss cost with an adjustment to account for the treatmentof expenses, profit, and variations in loss experience, prior to anyapplication of individual risk variations based on loss or expenseconsiderations, and does not include minimum premiums.
(8) "Supplementaryrating information". Includes any manual or plan of rates,classification, rating schedule, minimum premium, policy fee, rating rule, rate‑relatedunderwriting rule, experience rating plan, statistical plan and any othersimilar information needed to determine the applicable rate in effect or to bein effect.
(c) Except as providedin subsection (m) of this section, for workers' compensation and employers'liability insurance written in connection with workers' compensation insurance,the Bureau shall no longer develop or file advisory final rates that containprovisions for expenses (other than loss adjustment expenses) and profit. TheBureau shall instead develop and file for approval with the Commissioner, inaccordance with this section, reference filings containing advisory prospectiveloss costs and the underlying loss data and other supporting statistical andactuarial information for any calculations or assumptions underlying these losscosts. Loss‑based assessments will be included in prospective loss costs.
(d) After a referencefiling has been filed with the Commissioner and approved, the Bureau shallprovide its member insurers with a copy of the approved reference filing. TheBureau may print and distribute manuals of prospective loss costs as well asrules and other supplementary rating information described in subsection (k) ofthis section.
(e) Each insurer shallindependently and individually determine the final rates it will file and theeffective date of any rate changes. If an insurer decides to use theprospective loss costs in the approved reference filing in support of its ownfiling, the insurer shall make a filing using the reference filing adoptionform. The insurer's rates shall be the combination of the prospective losscosts and the loss multiplier contained in the reference filing adoption form.Insurers may file modifications of the prospective loss costs in the approvedreference filing based on their own anticipated experience. Supporting documentationis required for any upward or downward modifications of the prospective losscosts in the approved reference filing.
(f) The summary ofsupporting information form shall contain a reference to examples of how toapply an insurer's loss cost modification factor to the Bureau's prospectiveloss costs. Insurers may vary expense loads by individual classification orgrouping. Insurers may use variable or fixed expense loads or a combination ofthese to establish their expense loadings. Each filing that varies the expenseload by class shall specify the expense factor applicable to each class andshall include information supporting the justification for the variation.However, insurers shall file data in accordance with the uniform statisticalplan approved by the Commissioner. Insurers may offer premium discount plans.
(g) An insurer mayrequest to have its loss multiplier remain on file and reference all subsequentprospective loss costs reference filings. Upon receipt of subsequent approvedBureau reference filings, the insurer's rates shall be the combination of theprospective loss costs and the loss multiplier contained in the referencefiling adoption form on file with the Commissioner, and will be effective on orafter the effective date of the prospective loss costs. The insurer need notfile anything further with the Commissioner. If an insurer that has filed tohave its loss multiplier remain on file with the Department intends to delay,modify, or not adopt a particular Bureau reference filing, the insurer mustmake an appropriate filing with the Commissioner. The insurer's filed lossmultiplier shall remain in effect until the insurer withdraws it or files arevised reference filing adoption form. The provisions of G.S. 58‑40‑20,58‑40‑30, 58‑40‑35, and 58‑40‑45 apply tofilings made by insurers under this section.
(h) An insurer may filesuch other information that the insurer considers relevant and shall providesuch other information as may be requested by the Commissioner. When a filingis not accompanied by the information required under this section, theCommissioner shall inform the filer within 30 days after the initial filingthat the filing is incomplete and describe what additional information isrequired. A filing is complete when the required information is furnished orwhen the filer certifies to the Commissioner that the additional informationrequired by the Commissioner is not maintained or cannot be provided.
(i) To the extent thatan insurer's final rates are determined solely by applying its loss multiplier,as presented in the reference filing adoption form, to the prospective losscosts contained in the Bureau's reference filing and printed in the Bureau'srating manual, the insurer need not develop or file its final rate pages withthe Commissioner. If an insurer chooses to print and distribute final ratepages for its own use, based solely upon the application of its filed losscosts, the insurer need not file those pages with the Commissioner. If theBureau does not print the loss costs in its manual, the insurer must submit itsrates to the Commissioner.
(j) For referencefilings filed by the Bureau:
(1) If the insurer hasfiled to have its loss multiplier remain on file, applicable to subsequentreference filings, and a new reference filing is filed and approved and if:
a. The insurer decidesto use the revision of the prospective loss costs and effective date as filed,then the insurer does not file anything with the Commissioner. Rates are thecombination of the prospective loss costs and the on‑file loss multiplierand become effective on the effective date of the loss costs.
b. The insurer decidesto use the prospective loss costs as filed but with a different effective date,then the insurer must notify the Commissioner of its effective date before theeffective date of the loss costs.
c. The insurer decidesto use the revision of the prospective loss costs, but wishes to change itsloss multiplier, then the insurer must file a revised reference filing adoptionform before the effective date of the reference filing.
d. The insurer decidesnot to revise its rates using the prospective loss costs, then the insurer mustnotify the Commissioner before the effective date of the loss costs.
(2) If an insurer hasnot elected to have its loss multiplier remain on file, applicable to futureprospective loss costs reference filings, and a new reference filing is filedand approved, and if:
a. The insurer decidesto use the prospective loss costs to revise its rates, then the insurer mustfile a reference filing adoption form including its effective date.
b. The insurer decidesnot to use the revisions, then the insurer does not file anything with theCommissioner.
c. The insurer decidesto change its multiplier, then the insurer must file a reference filingadoption form referencing the current approved prospective loss costs,including its effective date and, if applicable, its loss costs modificationfactor and supporting documentation. The insurer shall not make a change to itsloss costs multiplier based on any reference filing other than the currentapproved reference filing.
(k) The Bureau shallfile with the Commissioner, for approval, filings containing a revision ofrules and supplementary rating information. This includes policy‑writingrules, rating plans, classification codes and descriptions, and rules thatinclude factors or relativities, such as increased limits factors and relatedminimum premiums classification relativities, or similar factors. The Bureaumay print and distribute manuals of rules and supplementary rating information.
(l ) If a new filing ofrules, relativities, and supplementary rating information is filed by theBureau and approved and if:
(1) The insurer decidesto use the revisions and effective date as filed together with the lossmultiplier on file with the Commissioner, then the insurer shall not fileanything with the Commissioner.
(2) The insurer decidesto use the revisions as filed but with a different effective date, then theinsurer must notify the Commissioner of its effective date before the approvedBureau filing's effective date.
(3) The insurer decidesnot to use the revision, then the insurer must notify the Commissioner beforethe Bureau filing's effective date.
(4) The insurer decidesto use the revision with modifications, then the insurer must file themodification with the Commissioner, specifying the basis for the modificationand the insurer's proposed effective date if different than the Bureau filing'seffective date.
(m) The Bureau shallfile all of the following with the Commissioner:
(1) Final workers'compensation rates and rating plans for the residual market.
(2) The uniformclassification plan and rules.
(3) The uniformexperience rating plan and rules.
(4) A uniform policy formto be used by member insurers for voluntary and residual market business.
(5) Advisory manualworkers' compensation rates to be used for the sole purpose of computing thepremium tax liability of self‑insurers under G.S. 105‑228.5.
(n) The rates filed undersubdivision (m)(1) of this section shall be set at levels to self‑fundthe residual market, provide adequate premiums to pay losses and expenses,establish appropriate reserves, and provide a reasonable margin forunderwriting profit and contingencies.
(o) Every insurer shalladhere to the uniform classification plan, experience rating plan, and policyform filed by the Bureau. (1995, c. 505, ss. 3‑8; 1999‑132, ss. 3.9‑3.12;2001‑232, s. 2.)