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The Vermont Statutes Online



Title

08

:
Banking and Insurance






Chapter

128

:
PROPERTY AND CASUALTY INSURANCE RATE REGULATION






Subchapter

001
:
INSURANCE RATES AND STATISTICS










 

§

4686. Rating methods or criteria

In determining

whether rates comply with the excessiveness standard in a noncompetitive market

under subdivision 4685(b)(2) of this title, the inadequacy standard under

subsection 4685(c) of this title and the unfair discrimination standard under

subsection 4685(d) of this title, the following criteria shall apply:

(1) Basic

factors in rates. Due consideration shall be given to past and prospective loss

and expense experience within, and as reasonable and necessary outside this

State; to catastrophe hazards; to residual market loss redistributions and

other similar obligations, if any; to a reasonable provision for underwriting

profit; to contingencies, if any; to trends within and outside this State; to

loadings for leveling premium rates over time or for dividends or savings to be

allowed or returned by insurers to their policyholders, members, or

subscribers; and to all other relevant factors.

(2)

Classification. Risks may be classified in any lawful and reasonable way for

the collection of statistics and establishment of rates. Rates may be modified

for individual risks in accordance with rating plans or schedules which provide

for recognition of probable variations in hazards, expenses, or both.

(3) Expenses.

The expense provisions included in the rates to be used by an insurer shall

reflect the operating methods of the insurer, and, so far as is determinable

and reasonable, its own actual and anticipated expense experience for the kind

of insurance involved, or any subdivision thereof.

(4) Profits. The

rates shall contain an allowance providing for a reasonable profit. In

determining the reasonableness of profit, consideration shall be given to all

relevant investment income and a provision for contingencies may be included.

(Added 1983, No. 238 (Adj. Sess.), § 1; 1987, No. 185 (Adj. Sess.), § 2, eff.

May 5, 1988.)