§1452. Purpose of rate regulation; construction; definitions
A. The purpose of this Subpart is to promote the public welfare by regulating
insurance rates to the end that they shall not be excessive, inadequate, or unfairly
discriminatory and to authorize and regulate cooperative action among insurers in ratemaking
and in other matters within the scope of this Subpart. Nothing in this Subpart is intended:
(1)To prohibit or discourage reasonable competition.
(2)To prohibit or encourage, except to the extent necessary to accomplish the
aforementioned purpose, uniformity in insurance rates, rating systems, rating plans, or
practices.
B. This Subpart shall be liberally interpreted to carry into effect the provisions of this
Section.
C. As used in this Subpart, the following definitions apply
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§1452. Purpose of rate regulation; construction; definitions
A. The purpose of this Subpart is to promote the public welfare by regulating
insurance rates to the end that they shall not be excessive, inadequate, or unfairly
discriminatory and to authorize and regulate cooperative action among insurers in ratemaking
and in other matters within the scope of this Subpart. Nothing in this Subpart is intended:
(1) To prohibit or discourage reasonable competition.
(2) To prohibit or encourage, except to the extent necessary to accomplish the
aforementioned purpose, uniformity in insurance rates, rating systems, rating plans, or
practices.
B. This Subpart shall be liberally interpreted to carry into effect the provisions of this
Section.
C. As used in this Subpart, the following definitions apply:
(1) "Advisory organization" means any entity or organization which has five
unrelated members and which assists insurers as authorized by R.S. 22:1471. It does not
include joint underwriting organizations, actuarial or legal consultants, single insurers, any
employees of an insurer, or insurers under common control or common management of their
employees or managers.
(2) "Classification system" or "classification" means the process of grouping risks
with similar risk characteristics so that differences in costs may be recognized.
(3) "Commercial risk" means any kind of risk which is not a personal risk.
(4) Repealed by Acts 2025, No. 11, §2.
(5) "Developed losses" means losses adjusted, including loss adjustment expenses,
using standard actuarial techniques, to eliminate the effect of differences between current
payment or reserve estimates and those which are anticipated to provide actual ultimate loss
payments, including loss adjustment expenses.
(6) "Excessive" means a rate that is likely to produce a profit that is unreasonably
high for the insurance provided or the expense provision included therein is unreasonably
high in relation to the services rendered.
(7) "Expenses" means that portion of a rate attributable to acquisition, field
supervision, collection expenses, general expenses, taxes, licenses, and fees and does not
include loss adjustment expenses or institutional advertising expenses.
(8) "Experience rating" means a rating procedure utilizing past insurance experience
of the individual policyholder to forecast future losses by measuring the policyholder's loss
experience against the loss experience of policyholders in the same classification to produce
a prospective premium credit, debit, or unity modification.
(9) "Inadequate" means a rate which is unreasonably low for the insurance provided
and either the continued use of which endangers the solvency of the insurer using it or will
have the effect of substantially lessening competition or creating a monopoly in any market.
(9.1) "Institutional advertising expenses" means advertising not aimed at obtaining
business for a specific insurer nor providing consumers with information pertinent to the
decision as to whether to purchase an insurance product.
(10) "Joint underwriting" means an arrangement established to provide insurance
coverage for a risk, pursuant to which two or more insurers contract with the insured for a
price and policy terms agreed upon between or among the insurers.
(11) "Large commercial policyholder" means a commercial policyholder with the
size, sophistication, and insurance buying expertise to negotiate with insurers in a largely
unregulated environment, as further prescribed by the commissioner by regulation.
(12) "Line of insurance" means those lines identified in this Title or as otherwise
specified by the commissioner.
(13) "Loss adjustment expense" means the expense incurred by the insurer in the
course of settling and paying claims.
(14) "Market" means the interaction between buyers and sellers in the procurement
of a line of insurance pursuant to the provisions of this Subpart.
(15) Repealed by Acts 2025, No. 11, §2.
(16) "Personal risk" means homeowners, tenants, nonfleet private passenger motor
vehicles, mobile homes, and other property and casualty insurance for personal, family, or
household needs, including any property and casualty insurance that is otherwise intended
for noncommercial coverage.
(17) "Pool" means an arrangement pursuant to which two or more insurers
participate in the sharing of risks on a predetermined basis. A pool may operate as an
association, syndicate, or in any other generally recognized manner.
(18) "Prospective loss cost" means that portion of a rate that does not include
provisions for expenses or profit and is based on historical aggregate losses adjusted through
development to their ultimate value, projected through trending to a future point in time, and
adjusted for other considerations expected to materially affect future loss payments.
(19) "Rate" means that cost of insurance per exposure unit, whether expressed as a
single number or as a prospective loss cost, with an adjustment to account for the treatment
of loss adjustment expenses, expenses, profit, and variation in expected future loss
experience, prior to any application of individual risk variations based on actual past loss or
expense considerations, and does not include minimum premiums.
(20) "Residual market mechanism" means an arrangement, either voluntary or
mandated by law, involving participation by insurers in the equitable apportionment of risks
among insurers for insurance which may be afforded applicants who are unable to obtain
insurance through ordinary methods.
(21) "Special assessments" means guaranty fund assessments, special indemnity fund
assessments, vocational rehabilitation fund assessments, and other similar assessments.
Special assessments shall not be considered as either expenses or losses.
(22) "Supplementary rate information" means any manual or plan of rates,
classification, rating schedule, minimum premium, policy fee, rating rule, and any other
similar information needed to determine an applicable rate in effect or to be in effect.
(23) "Supporting information" means the experience and judgment of the filer and
the experience or data of other insurers or organizations relied upon by the filer, the
interpretation of any statistical data relied upon by the filer, descriptions of methods used in
making the rates, and other similar information relied upon by the filer.
(24) "Trending" means any procedure for projecting losses to the average date of
loss, or premiums or exposures to the average date of writing, for the period during which
the policies are to be effective.
(25) "Unfairly discriminatory" means not capable of being actuarially justified or
based on race, color, creed, or national origin. It does not refer to rates that produce
differences in premiums for policyholders with different loss exposures, so long as the rate
is actuarially justified and reflects such differences with reasonable accuracy.
NOTE: Former R.S. 22:1452 redesignated as R.S. 22:21 by Acts 2008, No.
415, §1, eff. Jan. 1, 2009.