§ 4 — Standards applicable to making and use of rates

Section 4. The following standards shall apply to the making and use of rates pertaining to all insurance to which the provisions of this chapter are applicable:—(a) Rates shall not be excessive or inadequate, as herein defined, nor shall they be unfairly discriminatory. In connection with private passenger motor vehicle insurance, rates shall not be based, in whole or in part, on any credit information relating to an insured, including, but not limited to, a numerical credit-based insurance score or other credit rating of an insured; and provided, that no insurer, in connection with underwriting private passenger motor vehicle insurance or bonds based on the ownership or operation of a private passenger motor vehicle, shall refuse to issue or renew said insurance or bond based upon credit information, including, but not limited to, a numerical credit-based insurance score or other credit rating of an applicant or insured. Nothing in this section shall be construed to restrict any insurer from obtaining or using its own payment history information or information contained in an insurance claims history report, a motor vehicle or driver history report or any other report from the registry of motor vehicles or its out-of-state equivalent.No rate shall be held to be excessive unless such rate is unreasonably high for the insurance provided. Evidence that a reasonable degree of competition exists in the area with respect to the classification to which such rate is applicable shall be considered as material, but not conclusive evidence, that such rate is not excessive.No rate shall be held to be inadequate unless (1) such rate is unreasonably low for the insurance provided and (2) the continued use of such rate endangers the solvency of the insurer using the same, or unless (3) such rate is unreasonably low for the insurance provided and the use of such rate by the insurer using same has, or if continued will have, the effect of destroying competition or creating a monopoly.(b) Consideration shall be given, to the extent applicable, to past and prospective loss experience within and outside the commonwealth, to catastrophe hazards, to a reasonable rate of return on capital after provision for investment income, to past and prospective expenses both country-wide and those specially applicable to the commonwealth, and to all other factors, including judgment factors, deemed relevant within and outside the commonwealth.Consideration may also be given in the making and use of rates to dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers.(c) The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the operating methods of any such insurer or group with respect to any kind of insurance, or with respect to any subdivision or combination thereof.(d) Risks may be grouped by classification for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any difference among risks that have a probable effect upon losses or expenses. Such classifications and modifications shall apply to all risks under the same or substantially the same circumstances or conditions.For motor vehicle insurance rates, the commissioner shall establish a classification of risks which shall include a designation of not less than fifteen territories.For motor vehicle insurance rates, appropriate reductions in premium charges shall be applied to vehicles that are less damageable than others due to safety features incorporated into such vehicles and to those vehicles equipped with an anti-theft mechanism or device approved by the commissioner.For motor vehicle insurance, rates for an insured age sixty-five years or older, who otherwise qualify for the lowest rate classification applicable to drivers generally, shall be twenty-five per cent less than the applicable rate for such classification.For motor vehicle insurance rates, risks shall not be grouped by sex or marital status and shall not be grouped by age except to produce the reduction in rates for insureds age sixty-five years or older required by this clause.For motor vehicle insurance rates, no increase in premium charges shall be applied due to an at-fault accident that does not satisfy the criteria for a minor or major accident as defined by section 113B1/2 of chapter 175.(e) On and after January first, nineteen hundred and seventy-seven, no insurer shall use rates developed on the basis of external loss and expense factors without making such modification of such rates as the credibility of its own loss and expense experience allows. Any insurer writing one per cent or more of the premiums for motor vehicle insurance in the commonwealth during the preceding calendar year shall file with the commissioner or his designated representative under the provisions of section seven its own loss and expense experience to demonstrate the extent, if any, to which such insurer must so modify rates developed on the basis of external loss and expense factors.