§ 31A-19a-201 — Rate standards.

(1) Rates may not be excessive, inadequate, or unfairly discriminatory.
(2) (2)(a) Rates are not excessive if a reasonable degree of price competition exists at the consumer level with respect to the class of business to which they apply. In determining whether a reasonable degree of price competition exists, the commissioner shall consider:
(2)(a)(i) relevant tests of workable competition pertaining to:

(2)(a)(i)(A) market structure;
(2)(a)(i)(B) market performance; and
(2)(a)(i)(C) market conduct; and
(2)(a)(ii) the practical opportunities available to consumers in the market to:

(2)(a)(ii)(A) acquire pricing and other consumer information; and
(2)(a)(ii)(B) compare and obtain insurance from competing insurers.
(2)(b) The tests described in Subsection (2)(a) include:
(2)(b)(i) the size and number of insurers actively engaged in the market and class of business;
(2)(b)(ii) the market shares of insurers actively engaged in the market and changes in market shares;
(2)(b)(iii) the existence of rate differentials in that class of business;
(2)(b)(iv) ease of entry and latent competition of insurers capable of easy entry;
(2)(b)(v) availability of consumer information concerning the product and sales outlets or other sales mechanisms; and
(2)(b)(vi) efforts of insurers to provide consumer information.
(2)(c) If reasonable price competition does not exist, rates are excessive if:
(2)(c)(i) rates are likely to produce a long-term profit that is unreasonably high in relation to the riskiness of the class of business; or
(2)(c)(ii) expenses are unreasonably high in relation to the services rendered.
(3) Rates are inadequate if:

(3)(a) they are clearly insufficient, when combined with the investment income attributable to them, to sustain the projected losses and expenses in the class of business to which they apply; and
(3)(b) the use of such rates has or, if continued, will have:
(3)(b)(i) the effect of substantially lessening competition; or
(3)(b)(ii) the tendency to create a monopoly in any market.
(4) (4)(a) A rate is unfairly discriminatory if price differentials fail to equitably reflect the differences in expected losses and expenses after allowing for practical limitations.
(4)(b) A rate is not unfairly discriminatory if it is averaged broadly among persons insured under a:
(4)(b)(i) group, franchise, or blanket policy; or
(4)(b)(ii) mass marketed plan.

Legislative History

Renumbered and Amended by Chapter 130, 1999 General Session