To: Commercial lines insurers
RE: File and use law - clarifications and definitions
Date: January 13, 1998
This bulletin will provide clarification of the Department's implementation of the new file and use law for commercial lines, which went into effect July 1, 1997. We will attempt to answer the major questions raised by insurers and trade associations.
Contents of filings
The Department does not need lengthy, technical actuarial documentation of every aspect of your rate filing. At a minimum, we would like to see the following: Summary of rate indication calculations, premium and loss experience exhibit form, and the investment income exhibits required by K.A.R. 40-3-45 (to comply with the legislative mandate to consider the impact of investment income on rates). Trend and loss development exhibits need not be submitted, unless these calculations are the principal justification for rate adjustment.
If you are using any rate development/change methodology that is out of the ordinary, we would ask that documentation of that method be included.
We encourage communication by e-mail or FAX rather than regular mail. We encourage you to call about any questions concerning a filing, so we can resolve any obstacles in advance and expedite this process.
Definition of "small business owners package policy"
We have selected a definition of "small business insurance" which provides maximum flexibility to insurers for tailoring their "package" products for either the large complex insured or the "mom and pop" business customer, while helping our staff differentiate between the two and focusing their prior approval efforts only on the true "small business" owner program.
For the purposes of the new file and use law, a "small business insurance" policy is a package policy meeting all the following criteria:
An insurer can structure a filing to qualify for "file and use" treatment can accomplish this by deviating significantly from the above definition. We do not have any preconceived ideas about what a "significant deviation" would be. In the interests of providing maximum flexibility to you, we prefer you file your package, together with a written explanation why you believe it significantly deviates from the "small business owners' insurance." We certainly encourage advance calls to discuss your intent.
Definition of "homeowners, dwelling fire and renters" insurance
For the purposes of the new file and use law, a "homeowners," "dwelling fire" or "renters" policy is a policy, package or monoline, which provides property or liability coverage, or both, for habitational properties for one to four families or for apartment, condominium, townhouse or other rental property. Rates and rules would be filed for prior approval for if intended to insure habitational risks under the above definition, i.e. policy forms and rates for what are traditionally defined as Homeowner's package, Dwelling Fire, Renters, Condominium/Townhouse programs.
Definition of "farmowners" insurance
As intended in the new file and use law, a "farm owners" policy shall be policies, package or monoline, which provide property or liability coverage, or a combination of these coverages, for any property situated on premises used for farming and not otherwise eligible for a Homeowner's or Dwelling Fire policy. This would include policies generally referred to as "Farmowners" or "Farm Property" or "Farmowners/Ranchowners" policies.
If you have questions that are not answered by this bulletin, please call us. The appropriate manager or division supervisor numbers are:
Bill Wempe, Fire and Casualty Division Supervisor, 785-296-7845,firstname.lastname@example.org Jim Newins, sup'r, Auto Insurance,785-296-7833 Mel Scott, sup'r, HO, Farmowners,785-296-7838 Jeff Holthaus, sup'r, Professional Liability,785-296-7841 Dick Cook, sup'r, WC, Commercial,785-296-7835