Pair each rate regulatory system with its correct operational rule regarding when an insurer can implement new premium rates.
- Prior ApprovalThe insurer must submit rates to the state department and wait for official authorization before charging those rates to policyholders.
- File-and-UseThe insurer must submit rates to the state department but may begin charging them to policyholders on the same day they are submitted.
- Use-and-FileThe insurer may begin charging new rates to policyholders immediately but must submit them to the state department within a designated timeframe afterward.
- Open CompetitionThe insurer relies entirely on market forces for pricing and is exempt from filing its premium rates with the state department.
Answer
Prior Approval requires state authorization before use. File-and-Use permits immediate use upon filing. Use-and-File permits use first, followed by a filing deadline. Open Competition requires no filing, relying on the market.
The correct matches directly align the descriptive names of the regulatory systems with their statutory definitions regarding the timeline of rate implementation versus rate filing.
Step-by-Step Solution
Key Concept
State Rate Regulatory Systems