KANSAS
INSURANCE DEPARTMENT
K.A.R.
40-3-12. Fire and casualty insurance companies; rating plans;
requirements.
(a) “Individual risk rating plans” means shall mean
individual risk premium modification plans, schedule rating plans, and
similar plans applicable to commercial lines of property and casualty insurance
which that include one or more of the following types of premium
modification:
(1)
“Risk modification,” means
which shall mean the application of judgment debits and credits through
schedule rating or individual risk premium modification plans to the individual
rates otherwise applicable, based on the individual risk's variations in hazard
and characteristics of the risk not reflected in its the insured’s
experience. Risk modification does shall not include variations
in expenses.;
(2)
“expense
modification,” means which shall mean the variation of the
premium for an individual risk that corresponds to the variation in the
expenses of this risk from the provision for losses applicable to that entire
class of risk.; or
(3)
“experience
modification, excluding retrospective rating plans,” means which
shall mean a variation in the premium for an individual risk that
corresponds to that risk's variation in past loss experience from the provision
for losses applicable to that entire class of risk.
(b) Individual
risk rating plans permitted by K.S.A. 40-927 and 40-1112 40-954,
and amendments thereto, shall comply with meet the following
requirements:
(1) Each
plan shall specify the kind of insurance or subdivision, or combination,
to which the plan applies.
(2) The
maximum credit or debit resulting from risk modification shall not exceed 25
percent.
(3) Each
plan shall establish standards which that bear a relationship to
the variation in hazard or expense, or both, to be measured.
(4) Each
plan shall be mandatory for all eligible risks, and shall be applied by
company representatives responsible for underwriting the risk or risks involved
in a manner that is uniform and not unfairly discriminatory.
(5) Each
company using individual risk rating plans shall obtain all information
necessary to determine the proper application of the plans to any particular
risk. Each company shall maintain
adequate supporting information for examination by the commissioner upon
request.
(6) Any Each change or removal of
credits or debits which that results from the application of
individual risk rating plans shall occur only on the anniversary or renewal of
a policy but not during the policy period.
(7) Any Each change or removal of a debit or credit which that
was applied under an individual risk rating plan or expense modification must
shall be based on conclusive evidence that either the conditions which
that produced the most recent debits or credits no longer exist or their
impact has been reduced in direct proportion to the new rating treatment
applied. (Authorized by K.S.A. 40-103,
40-937 as amended by L. 1987, Ch. 166, Sec. 1, 40-1118 as amended by
L. 1987, Ch. 166, Sec. 2 and 40-961; implementing K.S.A. 40-927
as amended by L. 1987, Ch. 165, Sec. 1, 40-1112 as amended by L. 1987, Ch. 165,
Sec. 2 40-954; effective Jan. 1, 1966; amended May 1, 1979; amended
May 1, 1986; amended May 1, 1988; amended P- ____________________.)