§4685. Rate standards

Link to law: http://legislature.vermont.gov/statutes/section/08/128/04685
Published: 2015

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Title

08

:
Banking and Insurance






Chapter

128

:
PROPERTY AND CASUALTY INSURANCE RATE REGULATION






Subchapter

001
:
INSURANCE RATES AND STATISTICS










 

§

4685. Rate standards

(a) General.

Rates shall not be excessive, inadequate, or unfairly discriminatory.

(b)

Excessiveness.

(1) Competitive

market. A rate in a competitive market is not excessive or unfairly

discriminatory.

(2)

Noncompetitive market. Rates in a noncompetitive market are excessive if they

are producing or are likely to produce unreasonably high profits for the

insurance provided or if expenses are unreasonably high in relation to services

rendered.

(c) Inadequacy.

Rates are not inadequate unless insufficient to sustain projected losses and

expenses in the class or classes of business to which they apply or the use of

such rates has or, if continued, will have the effect of substantially

lessening competition or the tendency to create a monopoly in any market.

(d) Unfair

discrimination. Unfair discrimination exists if, after allowing for practical

limitations, price differentials fail to reflect equitably the differences in

expected losses and expenses. A rate is not unfairly discriminatory because

different premiums result for a class of policyholders with like loss exposures

but different expenses, or like expenses but different loss exposures, so long

as the rate equitably reflects the differences with reasonable accuracy. A rate

is not unfairly discriminatory if it is averaged broadly among persons insured

under a group, franchise, or blanket policy or a mass marketed plan. (Added

1983, No. 238 (Adj. Sess.), § 1.)
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