§ 412:15 — Rate Standards

Rates shall be made in accordance with the following provisions:
I. Rates shall not be excessive, inadequate, or unfairly discriminatory.
(a) A rate in a competitive market shall not be disapproved for being excessive.
(b) A rate in a noncompetitive market is excessive if it is likely to produce a profit that is unreasonably high for the insurance provided or if expenses are unreasonably high in relation to services rendered.
(c) A rate is inadequate if:
(1) The rate is unreasonably low for the insurance provided and the continued use of the rate endangers the solvency of the insurer using it; or unless
(2) The rate is unreasonably low for the insurance provided and the use of the rate by the insurer has, or if continued will have, the effect of substantially lessening competition or the tendency to create monopoly in any market.
(d) Unfair discrimination exists if, after allowing for practical limitations, price differentials fail to reflect equitably the differences in expected losses and expenses. A rate is not unfairly discriminatory if it is averaged broadly among persons insured under a group, franchise or blanket policy or a mass marketed plan. In this paragraph, amass marketed planmeans a method of selling property-liability insurance wherein:
(1) The insurance is offered to employees of particular employers or to members of particular associations or organizations or to persons grouped in other ways, except groupings formed principally for the purpose of obtaining such insurance; and
(2) The employer, association or other organization, if any, has agreed to, or otherwise affiliated itself with, the sale of such insurance to its employees or members.
II. In determining whether rates comply with the excessiveness standard in a noncompetitive market under subparagraph I(b), the inadequacy standards under subparagraph I(c) and the unfair discrimination standard under subparagraph I(d), the following criteria shall apply:
(a) Due consideration shall be given to past and prospective loss experience within and outside this state; to the conflagration and catastrophe hazards; to a reasonable margin for profit and contingencies; to dividends, savings, or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers; to past and prospective expenses both countrywide and those specifically applicable to this state; and to provisions for special assessments and to all other relevant factors within and outside the state.
(b) Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans that establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses. No risk classification, however, may be based upon race, creed, national origin or the religion of the insured.
(c) The expense provisions included in the rates to be used by an insurer shall reflect the operating methods of the insurer and its anticipated expenses.
(d) The rates may contain provision for contingencies and an allowance permitting a reasonable profit. In determining the reasonableness of the profit, consideration shall be given to all investment income attributable to the line of insurance.
III. (a) The use of any information from credit reports, credit histories, and credit scoring models for underwriting and rating purposes for homeowners insurance and private passenger automobile insurance shall be based upon objective, documented, and measurable standards and shall be used in a manner which provides for appropriate consumer protections, including adequate and clear consumer notice, procedures to promptly correct and adjust underwriting or rating decisions based on incorrect credit information, and confidentiality protections.
(b) The insurance commissioner shall, pursuant to RSA 541-A, adopt such rules as may be necessary to regulate the obligations of insurers with respect to the use of such information in the underwriting and rating of homeowners insurance and private passenger automobile insurance. Information that explains and justifies underwriting rules, credit scoring models or rating plans that rely upon credit reports, credit histories, or credit scoring mechanisms shall be included in the rate filing required pursuant to RSA 412:16.
IV. For commercial risks, except for workers' compensation which is governed by RSA 412:34, the commissioner may permit insurers to use appropriate systems of schedule rating filed by any insurer or advisory organization approved by the commissioner, subject to rules adopted under RSA 541-A, to assure the uniform and impartial application of such rating. Insurers shall retain supporting documentation for such ratings. Such ratings shall be:
(a) Based on an insured's management, safety, and loss control policies and record;
(b) Based on the policy administration expenses; and
(c) No greater than plus or minus 40 percent of the insurer's base rates.
V. In order to further uniform administration of rate regulatory laws, the commissioner and every insurer, advisory organization and statistical agent may exchange information and experience data with insurance supervisory officials, insurers and advisory organizations in other states and may consult with them with respect to the application of rating systems and the collection of statistical data.
VI. Insurers may charge service fees for unanticipated costs, such as the costs associated with returned checks or late payments. Such fees shall not be in excess of the reasonable administrative cost associated with the service at issue. Installment fees may not be charged for the first payment of each policy term because they are never unanticipated.
VII. For personal lines policies, the general rule is that premium is earned pro-rata over the length of the policy. However, insurers may file other than pro-rata earning patterns if the risk is distributed unevenly over the policy period. If the personal lines policy is canceled with or without cause by either party, all unearned premium at the time of the cancellation shall be returned to the insured.

Legislative History

2003, 150:1. 2006, 196:8. 2008, 212:5, eff. June 16, 2008. 2016, 115:2, eff. July 19, 2016. 2017, 55:5, 6, eff. Aug. 1, 2017. 2019, 103:1, eff. Aug. 20, 2019. 2021, 50:6, eff. July 24, 2021. 2023, 214:1, eff. Oct. 3, 2023.