N.J. Admin. Code § 11:2-42.4

Current through Register Vol. 56, No. 24, December 18, 2024

Section 11:2-42.4 - Expedited rate filings; data requirements

(a) All forms comprising an insurer's homeowners program shall be included, either in aggregate or separately if sufficient credibility of data exists.

(b) Premium, loss, and expense data shall be reported on a direct basis exclusive of business ceded to reinsurers or assumed from other insurers.

(c) Data items shall include:

1. Earned premium at present rates using either the extension of exposures or on-level factor method. Provide the relevant rate level history;

2. Premium trend factors, including all data and judgments made, and a description of the method used to select the factors;

3. Earned exposures measured in house years;

4. Paid and/or incurred losses with applicable loss development factors and formulas used;

5. Paid and/or incurred defense and cost containment expense with applicable development factors and formulas used;

6. Paid and/or incurred adjustings and other expenses;

7. Ultimate developed losses and loss adjustment expenses, including a description of the method used to select the ultimate amounts;

8. Paid and/or incurred claim counts with applicable development factors and formulas used;

9. Ultimate developed claim counts, including a description of the method used to select the ultimate amounts;

10. Loss trend factors, including all data and judgments made, and a description of the method used to select the factors;

11. Underwriting expense provisions, including all data and judgments made, and a description of the method used to select the amounts. Filers shall also provide at least a three-year history of expenses as reported in applicable NAIC Annual Statement exhibits;

12. Reinsurance costs, if applicable, including all data and judgments made, and an explanation of how the costs were determined;

13. Residual market load, if applicable, including all data and judgments made, and an explanation of how the costs were determined; and

14. Profit and contingency provision, including all data and judgments made, and an explanation of how the provision was determined.

(d) Filers shall, when appropriate, adjust loss and loss adjustment expense data to exclude catastrophic events, including individual large losses. Losses may include provisions for expected catastrophic events and expected large losses based on long-term experience or modeled forecasts. If models are used, filers shall provide information regarding all assumptions incorporated into the projections, a sensitivity analysis based on varying the assumptions, and a discussion as to why the specific projections were selected as the best estimate of expected losses.

(e) If there is a proposed change to rating factors, including those applicable to territories, deductible options, protection/construction classes, amount of insurance, or liability increased limit factors, filers shall provide all data used and judgments made, and also a description of the method used to derive the proposed factors.

(f) Regarding any applicable credibility procedures, filers shall provide all data used and judgments made, and a description of the method used to select credibility weights and complements.

(g) Filers shall account for impacts of significant changes to legislative, regulatory, social, economic, or operational factors that have an impact on loss frequency or severity, or on expenses.

(h) Filers shall provide a reconciliation of any significant changes to their indicated rate need compared to the indicated rate need from the filer's most recent filing to the Department. The reconciliation shall address underlying changes in experience as well as changes to any portion of the filer's selected methodology.

(i) Rating organizations shall be exempt from providing any premium or expense data required in (a) or (c) above.

(j) Where the application is by an insurer that is a member of a rating organization, the insurer may refer to the loss and loss adjustment expense data filed by the rating organization to comply with the requirements of this section.

N.J. Admin. Code § 11:2-42.4

Adopted by 50 N.J.R. 899(b), effective 2/20/2018