§ 4985 — Policy forms and rates

(a) The Commissioner shall specify whether policy forms and the rate structure shall be on a claims-made, occurrence, or other basis and coverage shall be provided by an association only on the basis specified by the Commissioner. The Commissioner may specify a claims-made basis only if the contract makes provisions for residual “occurrence” coverage or extended reporting coverage upon the discontinuance of the insured activity in this State of the insured or the termination of the insurance policy by the insured for so long as there is a reasonable probability of a claim for injury for which the insured may be held liable. Provision may be made for a premium charge allocable to any such residual “occurrence” coverage and such premium charges for such residual coverage shall be segregated and separately maintained and calculated to be self-supporting for such purpose, which may include the reinsurance of all or a part of that portion of the risk. All policy forms shall be approved by the Commissioner.
(b) The rates, rating plans, rating rules, and rating classifications applicable to the insurance written by the association shall be approved by the Commissioner after hearing and shall be on an actuarially sound basis calculated to be self-supporting without insured assessments, giving due consideration to the past and prospective loss and expense experience within and without this State for that line of insurance written and to be written in this State, trends in the frequency and severity of losses, the investment income of the association, and such other information as the Commissioner may require.
(c) Policies issued by an association may provide for deductibles and for coinsurance, premium discounts, surcharges, separate classifications that reflect income, and other features not necessarily in current use. (Added 1985, No. 265 (Adj. Sess.), § 4, eff. June 4, 1986.)