Arrange the following steps in the correct chronological order for an insurance company seeking to introduce a new premium rate in a state that uses a standard 'Prior Approval' regulatory system.
- 1The insurer submits the proposed policy forms and rate manual to the state Department of Insurance.
- 2The statutory waiting period commences.
- 3The Commissioner reviews the filing to determine if the rates are adequate, not excessive, and not unfairly discriminatory.
- 4The Department approves the filing, or the waiting period expires (triggering the deemer provision), allowing the insurer to implement the rates.
Answer
The correct sequence is: submitting the proposed rates, starting the statutory waiting period, the Commissioner's review, and finally the approval or deemer provision taking effect.
In a Prior Approval system, an insurer cannot use rates immediately. The process flows chronologically: first the filing is submitted, which triggers a mandatory waiting period. During this time, the state regulators review the rates for compliance. Finally, if the rates are deemed appropriate (or if the waiting period simply expires without rejection), they are approved for use.
Step-by-Step Solution
Key Concept
Prior Approval Rate Filing Process