§ 26.1-25-02.1 — Definitions

North Dakota § 26.1-25-02.1

• Jurisdiction: North Dakota
• Title 26.1: Insurance
• Ch. 26.1-25: Fire, Property, and Casualty Insurance Rates

Text

1. "Advisory organization" means any entity, including its affiliates or subsidiaries, which
either has two or more member insurers or is controlled either directly or indirectly by
two or more insurers, and which assists insurers in ratemaking-related activities as
enumerated in this chapter. Two or more insurers having a common ownership or
operating in this state under common management or control constitute a single
insurer for purposes of this definition.
2. "Commercial risk" means any kind of risk which is not a personal risk.
3. "Competitive market" means a commercial risk market that has not been found to be
noncompetitive as provided for in section 26.1-25-04. All commercial risk markets

except crop hail, farmowners, and medical malpractice insurance are presumed to be
competitive.
4. "Developed losses" means losses including loss adjustment expenses, adjusted, using
standard actuarial techniques, to eliminate the effect of differences between current
payment or reserve estimates and those needed to provide actual ultimate loss
including loss adjustment expense payments.
5. "Expenses" means that portion of a rate attributable to acquisition, field supervision,
collection expenses, general expenses, taxes, licenses, and fees.
6. "Joint underwriting" means a voluntary arrangement established to provide insurance
coverage for a commercial risk pursuant to which two or more insurers jointly contract
with the insured at a price and under policy terms agreed upon between the insurers.
7. "Large commercial risk" means an insured that has:
a. Total insured property values of twenty-five million dollars or more;
b. Total annual gross revenue of fifty million dollars or more; or
c. A total premium of one hundred thousand dollars or more for property insurance,
one hundred thousand dollars or more for general liability insurance, or
two hundred thousand dollars or more for multiperil insurance.
d. The term does not include farming or ranching.
8. "Loss trending" means any procedure for projecting developed losses to the average
date of loss for the period during which the policies are to be effective.
9. "Noncompetitive market" means the crop hail, farmowners, and medical malpractice
insurance markets together with any other line of commercial risk insurance that has
not been found by the commissioner to have a reasonable degree of competitiveness
within the market considering:
a. Market concentration and changes in market concentration determined through
the use of the Herfindahl-Hirschman index and the United States department of
justice merger guidelines for an unconcentrated market;
b. The existence of financial and other barriers that prevent a company from
entering the market;
c. The number of insurers or groups of affiliated insurers providing coverage in the
market;
d. The extent to which any insurer or group of affiliated insurers controls the market;
e. Whether the total number of companies writing the line of insurance in this state
is sufficient to provide multiple insurance options in the market;
f. The availability of insurance coverage to consumers in the markets by specific
geographic area, by line of insurance, and by class of risk; and
g. The opportunities available in the market to acquire pricing and other consumer
information.
A determination that a market is noncompetitive may not be based solely on the
consideration of any one factor.
10. "Personal risk" means homeowners, tenants, private passenger nonfleet automobiles,
mobile homes, and other property and casualty insurance for personal, family, or
household needs.
11. "Pool" means a voluntary arrangement, established on an ongoing basis, pursuant to
which two or more insurers participate in the sharing of risks on a predetermined
basis. The pool may operate through an association, syndicate, or other pooling
agreement.
12. "Prospective loss costs" means that portion of a rate that does not include provisions
for expenses other than loss adjustment expenses, or profit, and are based on
historical aggregate losses and loss adjustment expenses adjusted through
development to their ultimate value and projected through trending to a future point in
time.
13. "Rate" means that cost of insurance per exposure unit whether expressed as a single
member or as a prospective loss cost with an adjustment to account for the treatment
of expenses, profit, and individual insurer variation in loss experience, prior to any

application of individual risk variations based on loss or expense considerations, and
does not include minimum premium.
14. "Residual market mechanism" means an arrangement, either voluntary or mandated
by law, involving participation by insurers in the equitable apportionment among them
of insurance which may be afforded applicants who are unable to obtain insurance
through ordinary methods.
15. "Supplementary rating information" includes any manual or plan of rates, classification,
rating schedule, minimum premium, policy fee, rating rule, underwriting rule, statistical
plan, and any other similar information needed to determine the applicable rate in
effect or to be in effect.
16. "Supporting information" means:
a. The experience and judgment of the filer and the experience or date of other
insurers or advisory organizations relied upon by the filer;
b. The interpretation of any other data relied upon by the filer; and
c. Descriptions of methods used in making the rates and any other information
required by the commissioner to be filed.