Chapter 14 - Rates And Rating Organizations
CHAPTER 14 - RATES AND RATING ORGANIZATIONS
26-14-101. Purpose of chapter; liberal interpretation.
Thepurpose of this chapter is to protect the public and policyholders against theeffects of excessive, inadequate or unfairly discriminatory rates by promotingprice competition among insurers. The provisions in this chapter are intendedto prohibit unlawful price fixing agreements by or among insurers and toauthorize essential cooperative activities among insurers in the rate makingprocess and to regulate these activities to prohibit practices that tend tosubstantially lessen competition or create monopolies. This chapter shall beliberally interpreted to carry into effect the provisions of this section.
26-14-102. Scope and applicability of chapter; liberal interpretation.
(a) This chapter applies to all kinds of insurance written onrisks in this state by any insurer authorized to do business, except nothing inthis chapter applies to:
(i) Life insurance;
(ii) Disability insurance;
(iii) Reinsurance;
(iv) Insurance against loss of or damage to aircraft, theirhulls, accessories and equipment, or against liability arising out of theownership, maintenance or use of aircraft;
(v) Insurance of vessels or craft, their cargoes, marinebuilders' risks, marine protection and indemnity, or other risks commonlyinsured under marine, as distinguished from inland marine, insurance policies;
(vi) Title insurance;
(vii) Annuities;
(viii) Worker's compensation insurance as provided under title 27,chapter 14 of the Wyoming statutes.
(b) No insurer shall be required to file any rates with thecommissioner other than those for insurance not subject to this act or definedas noncompetitive in this act, after the passage of this act.
(c) This chapter shall be liberally interpreted to carry outthe purpose specified in W.S. 26-14-101.
26-14-103. Definitions.
(a) As used in this chapter:
(i) "Advisory organization" means any person ororganization which assists insurers as authorized by W.S. 26-14-110. It doesnot include joint underwriting organizations, actuarial or legal consultants, asingle insurer, any employees of an insurer or insurers under common control ormanagement of their employees or managers;
(ii) "Competitive market" means any market exceptthose which are noncompetitive pursuant to this chapter;
(iii) "Excessive" means a rate that is likely toproduce a long-term profit that is unreasonably high for the insuranceprovided. In a competitive market rates shall not be considered excessive;
(iv) "Inadequate" means a rate which is unreasonablylow for the insurance provided and the continued use of which endangers thesolvency of the insurer using it or will have the effect of substantiallylessening competition or creating a monopoly in any market;
(v) "Joint underwriting" means an arrangementestablished to provide insurance coverage for a risk, pursuant to which two (2)or more insurers contract with the insured for a price and policy terms agreedupon between or among the insurers;
(vi) "Market" means the statewide interaction betweenbuyers and sellers in the procurement of a line of insurance coverage pursuantto the provisions of this chapter;
(vii) "Noncompetitive market" means:
(A) Residual markets;
(B) Pools;
(C) Credit property insurance, including vendors' singleinterest physical damage insurance where the buyer pays a separate charge forinsurance; or
(D) Any market in which:
(I) There are less than five (5) insurers actually issuing aparticular line of insurance as determined by the commissioner;
(II) Three (3) insurers transact more than ninety percent (90%)of the business;
(III) Two (2) insurers transact more than eighty percent (80%) ofthe business; or
(IV) There is reasonable evidence, as determined by thecommissioner, of collusion among insurers in setting prices.
(viii) "Pool" means an arrangement pursuant to which two(2) or more insurers participate in the sharing of risks on a predeterminedbasis. A pool may operate as an association, syndicate or in any othergenerally recognized manner;
(ix) "Residual market mechanism" means an arrangement,either voluntary or mandated by law, involving participation by insurers in theequitable apportionment of risks among insurers for insurance which may beafforded applicants who are unable to obtain insurance through ordinary methods;
(x) "Supplementary rate information" means any manualor plan of rates, classification, rating schedule, minimum premium, policy fee,rating rule and any other similar information needed to determine an applicablerate in effect or to be in effect;
(xi) "Supporting information" means the experience andjudgment of the filer and the experience or data of other insurers ororganizations relied upon by the filer, the interpretation of any statisticaldata relied upon by the filer, a description of methods used in making therates and other similar information relied upon by the filer;
(xii) "Unfairly discriminatory" refers to rates thatcannot be actuarially justified. It does not refer to rates that producedifferences in premiums for policyholders with like loss exposures butdifferent expenses, or like expenses but different loss exposures, so long asthe rate reflects such differences with reasonable accuracy. A rate is notunfairly discriminatory if it averages broadly among persons insured under agroup, franchise or blanket policy or a mass marketing plan. No rate in acompetitive market shall be considered unfairly discriminatory unless itviolates the provisions of W.S. 26-14-105(b) in that they classify in whole orin part on the basis of race, color, creed or national origin.
26-14-104. Competitive market presumed to exist.
Acompetitive market is presumed to exist except as otherwise provided by thischapter.
26-14-105. Rating standards; methods.
(a) Rates shall not be excessive, inadequate or unfairlydiscriminatory.
(b) Risks may be classified in any way except that no risk maybe classified in whole or in part on the basis of race, color, creed ornational origin. In determining whether rates in a noncompetitive market areexcessive, inadequate or unfairly discriminatory, consideration may be given tothe following elements:
(i) Basic Rate Factors. - Consideration may be given to pastand prospective loss and expense experience within and outside of this state,to catastrophe hazards and contingencies, to events or trends within andoutside of this state, to dividends or savings to policyholders, members orsubscribers and to all other factors and judgments deemed relevant by theinsurer;
(ii) Classification. - Rates may be modified for individualrisks in accordance with rating plans or schedules which establish standardsfor measuring probable variations in hazards or expenses, or both;
(iii) Expenses. - The expense provisions shall reflect theoperating methods of the insurer and, so far as credible, its own actual andanticipated expense experience; and
(iv) Contingencies and Profits. - The rates may contain aprovision for contingencies and a provision for a reasonable underwritingprofit, and shall reflect investment income directly attributable to unearnedpremium and loss reserves.
(c) Any insurer delivering or issuing for delivery in thisstate any new or renewal policy or contract of private passenger automobileliability or collision insurance or both, shall allow a reduction in premiumcharges of not less than ten percent (10%) to any insured who:
(i) Is at least fifty-five (55) years of age;
(ii) Successfully completes, at least every two (2) years, amotor vehicle accident prevention course meeting criteria the motor vehicledivision approves, provided no person shall receive any premium reduction for aself-instructed course or a course which does not provide for actual classroomor field driving instruction for a minimum number of hours as the motor vehicledivision approves; and
(iii) Presents to the insurer a certificate or other evidence ofsuccessful completion of the course specified in this subsection.
26-14-106. Rate regulation.
(a) Rates in a noncompetitive market, when regulated, shall beregulated in accordance with W.S. 26-14-105 through 26-14-108 applicable tononcompetitive markets.
(b) The commissioner may regulate rates in an unregulatedmarket if he determines that:
(i) The unregulated market is a noncompetitive market; and
(ii) Regulation will likely reduce rates for consumers in atotal amount greater than the cost of regulation without substantiallycurtailing the availability of insurance in that market.
(c) The commissioner may declare a noncompetitive market competitiveif he determines the noncompetitive market no longer meets the conditions of anoncompetitive market as defined in W.S. 26-14-103(a)(vii).
(d) To carry out the purpose of subsections (b) and (c) of thissection, the commissioner, upon his own motion, may conduct a rate or otherinvestigation. The commissioner shall conduct a rate or other investigationupon request of:
(i) Not less than ten percent (10%) of the insureds in anymarket;
(ii) Any organization representing not less than ten percent(10%) of the insureds in any market; or
(iii) Insurers selling at least thirty percent (30%) of theinsurance in any market.
(e) The commissioner shall not be compelled to conduct aninvestigation of any line of insurance pursuant to subsection (d) of thissection more than once in any three (3) year period for any line of insurancebut may do so.
(f) As a part of any investigation under subsection (d) of thissection the commissioner:
(i) May require any insurer to submit actuarial and expensedata relating to any line of insurance;
(ii) May contract the services of an actuarial consultant andassess the cost thereof against the parties requesting the investigation oragainst the insurers affected if the investigation is conducted upon thecommissioner's motion;
(iii) Shall conduct a hearing upon not less than twenty (20) dayswritten notice to affected parties, provided this requirement may be waivedupon written agreement of the affected parties;
(iv) Depending upon the availability of data and the existenceof sufficient experience to allow for an actuarially sound determination, maybase any regulation of rates for any line of insurance under this section onexperience or loss data for that line of insurance in:
(A) Wyoming alone;
(B) Wyoming and selected other states with reasonably similarcharacteristics; or
(C) The United States as a whole excluding states whoseexperience is atypical.
(g) For rates regulated pursuant to subsections (a) and (b) ofthis section, there shall be a public hearing if within any twelve (12) monthperiod an insurer requests approval of a base premium rate which when added toany other base premium rates pending or approved within that twelve (12) monthperiod is twenty percent (20%) or more above the rate approved for the previousrating period. For health care professional malpractice insurance, a rateincrease of more than twenty-five percent (25%) in any specialty shall cause aconsolidated hearing on the rate increase. The informational hearing shall beheld within sixty (60) days of the request for approval unless the commissionerdelays the hearing for good cause. If the hearing is delayed the commissionershall notify the insurer and any other person requesting notification of thereasons for the delay.
(h) The following shall apply to any market found to benoncompetitive pursuant to subsections (a) and (b) of this section and to anyprofessional liability insurance for any health care provider licensed undertitle 33 of the Wyoming statutes:
(i) The rate charged any individual insured shall not exceedthe base rate approved by the commissioner for the insured's risk class by morethan one hundred percent (100%), unless the commissioner has established forthe applicable risk class a percentage limit of less than one hundred percent(100%);
(ii) The rate charged an insured for extended reporting coveragefollowing expiration, termination or nonrenewal of the insured's claims-madepolicy shall be subject to the following:
(A) The rate shall be calculated according to a formula setforth in the insured's policy, which formula shall be subject to approval bythe commissioner;
(B) The formula shall be expressed as a percentage of the baserate for the insured's risk class or that insured's underwritten rate;
(C) The percentage may be varied on a uniform basis for eachrisk class by the length of time during which the events covered by theextended reporting coverage may have arisen; and
(D) If an individual elects to purchase the extended reportingcoverage before the renewal date of his policy, the rates charged for theextended reporting coverage shall be computed based on the relevant rates forthat insured before the renewal, not the rates that would be in effect upon renewal.
26-14-107. Filing of rates; supplementary rate information; supportinginformation; public inspection; consent to rates.
(a) In competitive markets, every insurer shall maintain allrates and supplementary rate information to be used in this state, inaccordance with the provisions of W.S. 26-14-113(b), and such information shallbe made available to the commissioner upon his request.
(b) In noncompetitive markets, every insurer shall file withthe commissioner all rates, supplementary rate information and supportinginformation for noncompetitive markets at least thirty (30) days before theproposed effective date. The commissioner may give written notice, withinthirty (30) days of the receipt of the filing, that he needs additional time, notto exceed thirty (30) days from the date of the notice, to consider the filing.Upon written application of the insurer, the commissioner may authorize ratesto be effective before the expiration of the waiting period or an extensionthereof. A filing shall be deemed to meet the requirements of this chapter andto become effective unless disapproved pursuant to W.S. 26-14-108 by thecommissioner before the expiration of the waiting period or an extensionthereof. Residual market mechanisms or advisory organizations may file residualmarket rates. The filing shall be deemed in compliance with the filingprovisions of this section unless the commissioner informs the insurer withinten (10) days after receipt of the filing as to what supplementary rate informationor supporting information is required to complete the filing.
(c) All information provided to the insurance commissionerunder this chapter shall be open to public inspection. Copies may be obtainedfrom the commissioner upon request and upon payment of a reasonable fee.
(d) Notwithstanding any other provisions of this section, uponwritten application of the insured, stating the reason therefor filed with thecommissioner, a rate in excess of that otherwise applicable may be used on anyspecific risk.
26-14-108. Disapproval of rates; bases; procedures.
(a) The commissioner shall disapprove a rate for use in anoncompetitive market if he finds pursuant to subsection (b) of this sectionthat the rate is excessive, inadequate or unfairly discriminatory.
(b) Disapproval of rates by the commissioner shall be subjectto the following procedures:
(i) Prior to the expiration of the waiting period or anextension thereof of a filing made pursuant to W.S. 26-14-107(b), thecommissioner may disapprove by written order rates filed pursuant to W.S.26-14-107(b) without hearing. The order shall specify in what respects suchfiling fails to meet the requirements of this chapter. Any insurer whose ratesare disapproved under this section shall be given a hearing upon writtenrequest made within thirty (30) days of disapproval;
(ii) If at any time the commissioner finds that a rateapplicable to insurance sold in a noncompetitive market does not comply withthe standards set forth in W.S. 26-14-105, he may, after a hearing held uponnot less than twenty (20) days written notice, issue an order in accordancewith subsection (c) of this section, disapproving the rate. Such notice shallbe sent to every insurer and rate service organization which adopted the rateand shall specify the matters to be considered at the hearing. The order shallnot affect any contract or policy made or issued prior to the expiration of theperiod set forth in the order.
(c) If the commissioner disapproves a rate pursuant to subsection(b) of this section, he shall issue an order within thirty (30) days of theclose of the hearing specifying in what respects the rate fails to meet therequirements of this chapter. The order shall state an effective date no soonerthan forty-five (45) business days after the date of the order when the use ofthe rate shall be discontinued. The order shall not affect any policy madebefore the effective date of the order.
26-14-109. Advisory organizations; registration required; authorizedactivities; availability of services.
(a) No advisory organization shall provide any service relatingto the rates of any insurer subject to this chapter, and no insurer shallutilize the services of such organization for such purposes unless theorganization has registered under subsection (d) of this section.
(b) A registered advisory organization may perform any of thefollowing activities:
(i) Develop statistical plans including territorial and classdefinitions;
(ii) Collect statistical data from members, subscribers or anyother source;
(iii) Prepare and distribute pure premium data, adjusted for lossdevelopment and loss trending, in accordance with its statistical plans, andprepare and distribute rates including expenses and profits;
(iv) Prepare and distribute manuals of rating rules and ratingschedules;
(v) Distribute information that is filed with the commissionerand open to public inspection;
(vi) Conduct research and on-site inspections in order toprepare classifications of public fire defenses;
(vii) Consult with public officials regarding public fireprotection as it would affect members, subscribers and others;
(viii) Conduct research and collect statistics in order todiscover, identify and classify information relating to causes or prevention oflosses;
(ix) Prepare and file on behalf of an insurer policy forms andendorsements and consult with members, subscribers and others relative to theiruse and application;
(x) Conduct research and on-site inspections for the purpose ofproviding risk information relating to individual structures;
(xi) Collect, compile and distribute past and current prices ofindividual insurers if such information is made available to the generalpublic;
(xii) Notwithstanding any other provision of law, advisoryorganizations may perform those activities allowed under W.S. 26-23-301 through26-23-333.
(c) Repealed by Laws 1987, ch. 195, 2.
(d) No advisory organization shall refuse to supply anyauthorized services for which it is registered in this state to any insurerauthorized to do business in this state and offering to pay the fair and usualcompensation for the services, nor shall an advisory organization require thepurchase of any specific services as a condition to obtaining the servicessought, provided the furnishing of the requested services does not place anunreasonable burden on the advisory organization.
(e) An advisory organization shall submit at the time ofregistration:
(i) A copy of its constitution, articles of association orincorporation, bylaws and any other rules or regulations governing the conductof its business;
(ii) A list of its members and subscribers;
(iii) The name and address of one (1) or more residents of thisstate upon whom notices, process affecting it or on orders of the commissionermay be served;
(iv) Any other relevant information and documents that thecommissioner may require.
(f) Every organization which has registered shall promptlynotify the commissioner of every material change in the facts or in thedocuments on which its registration was based.
26-14-110. Records and reports; exchange of information.
(a) Insurers shall file with the commissioner, and thecommissioner shall review, reasonable rules and plans for recording andreporting of loss and expense experience. The commissioner may designate one(1) or more advisory organizations to assist in gathering such experience andmaking compilations thereof. No insurer shall be required to record or reportits experience in a manner inconsistent with its own rating system.
(b) The commissioner and every insurer and an advisoryorganization may exchange information and experience data with insuranceregulatory officials, insurers, rate service organizations and advisoryorganizations in this and other states and may consult with them with respectto rate making and the application of rating systems.
26-14-111. Insurers and advisory organizations; monopolies prohibited;agreements to adhere prohibited.
(a) No insurer or advisory organization shall attempt tomonopolize or combine or conspire with any other person to monopolize aninsurance market in this state.
(b) Except as otherwise provided in this chapter, no insurershall agree with any other insurer, rate service organization or advisoryorganization to adhere to or use any rate, supplementary rate information,policy surveys, inspections or similar material.
(c) The fact that two (2) or more insurers, whether or notmembers or subscribers of any advisory organization, use consistently orintermittently the same rates, supplementary rate information, policy or bondforms, surveys, inspections or similar materials is not sufficient in itself tosupport a finding that an illegal agreement exists and may be used only for thepurpose of supplementing or explaining other direct evidence of the existenceof any such agreement.
(d) Two (2) or more insurers having a common ownership oroperating in this state under common management or control may act in concertbetween or among themselves with respect to any matters pertaining toactivities authorized in this chapter as if they constituted a single insurer.
26-14-112. Joint underwriting; pool and residual market activities.
(a) Insurers participating in joint underwriting, pools orresidual market mechanisms may act in cooperation with each other in the makingof rates, supplementary rate information, policy or bond forms, surveys,inspections and investigations, the furnishing of loss and expense statisticsor other information and conducting research. Joint underwriting, pools andresidual market mechanisms shall not be deemed rate advisory organizations.
(b) If, after notice and hearing, the commissioner finds thatany activity or practice of an insurer participating in a joint underwriting orpooling mechanism is unfair or unreasonable, or otherwise inconsistent with theprovisions or purposes of this chapter, he may issue a written order specifyingin what respects such activity or practice is unfair, unreasonable,anti-competitive or otherwise inconsistent with the provisions of this chapterand require the discontinuance of such activity or practice.
(c) Every pool shall file with the commissioner a copy of itsconstitution, articles of incorporation, agreement or association, bylaws,rules and regulations governing activities, the name and address of a residentof this state upon whom notices, process and orders of the commissioner may beserved and any changes or modifications thereof.
(d) Any residual market mechanism, plan or agreement toimplement such a mechanism, and any changes or amendments thereto, shall besubmitted in writing to the commissioner for approval, together with anyinformation as he may reasonably require. The commissioner shall approve suchagreements if they foster the use of rates which meet the standards prescribedby this chapter and activities and practices not inconsistent with theprovisions of this chapter.
(e) The commissioner may review the operations of all residualmarket mechanisms to determine compliance with the provisions of this chapter.If, after a notice and hearing, the commissioner finds that the mechanisms areviolating the provisions of this chapter, he may issue a written order to theparties involved specifying in what respects the operations violate theprovisions of this chapter. He may further order the discontinuance orelimination of any operation.
26-14-113. Examinations; records; costs; report in lieu of examination.
(a) The commissioner may examine any insurer, pool, advisoryorganization or residual market mechanism to ascertain compliance with thischapter.
(b) Every insurer, pool, advisory organization and residualmarket mechanism shall maintain adequate records from which the commissionermay determine compliance with the provisions of this chapter. The records shallcontain the experience, data, statistics and other information collected orused and shall be available to the commissioner for examination or inspectionupon reasonable notice.
(c) The reasonable cost of an examination made pursuant to thissection shall be paid by the examined party upon presentation to it of adetailed account of the costs.
(d) The commissioner may accept the report of an examinationmade by the insurance supervisory official of another state in lieu of anexamination under this section.
26-14-114. Exemptions.
Thecommissioner may exempt any line of insurance from any or all of the provisionsof this chapter for the purpose of relieving the line of insurance from filingprovisions of this chapter.
26-14-115. Dividends.
Nothingin this chapter shall be construed to prohibit or regulate the payment ofdividends, savings or unabsorbed premium deposits allowed or returned by insurersto their policyholders, members or subscribers. A plan for the payment ofdividends, savings or unabsorbed premium deposits allowed or returned byinsurers to their policyholders, members or subscribers shall not be deemed arating plan or system.
26-14-116. Penalties; technical violations; revocation and suspensionof license; written orders; contents.
(a) The commissioner may impose after notice and hearing apenalty of not more than one thousand dollars ($1,000.00) for each violation ofthis chapter. The penalty may be in addition to any other penalty provided bylaw. In no event shall penalties imposed by this subsection exceed fiftythousand dollars ($50,000.00) in the aggregate.
(b) Technical violations arising from systems or computererrors of the same type shall be treated as a single violation. In the event ofan overcharge, if the insurer makes restitution including payment of interest,no penalty shall be imposed.
(c) The commissioner may suspend or revoke the license of anyinsurer or advisory organization which fails to comply with an order of thecommissioner within the time prescribed by the order, or any extension thereofwhich the commissioner may grant.
(d) The commissioner may determine when a suspension of licenseshall become effective and the period of the suspension, which he may modify orrescind in any reasonable manner.
(e) No penalty shall be imposed and no license shall besuspended or revoked except upon a written order of the commissioner made afternotice and hearing, which shall include a finding that the party against whomthe proceedings were brought violated this chapter, specify the section orsections of the statutes violated, and indicate the penalty and taxes, if any,imposed.
26-14-117. Judicial review.
Anyorder, ruling, finding, decision or other act of the commissioner made pursuantto this chapter shall be subject to judicial review in accordance with theWyoming Administrative Procedure Act.
26-14-118. Notice and hearing.
(a) All notices rendered pursuant to the provisions of thischapter shall be in writing and shall state clearly the nature and purpose ofthe hearing. All relevant facts, statutes and rules shall be specified so thata respondent is fully informed of the scope of the hearing, including specificallegations, if any. If a hearing is required, all notices shall designate ahearing date at least two (2) weeks from the date of the notice, unless suchminimum notice period is waived by respondent.
(b) All hearings pursuant to the provisions of this chaptershall be conducted in accordance with the Wyoming Administrative Procedure Actto the extent the provisions are consistent with the procedural requirementscontained in this chapter.
26-14-119. Repealed by Laws 1994, ch. 86, 3.