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§ 2632.11. Submission of Class Plans, Symbols, and Implementation Data.

10 CA ADC § 2632.11BARCLAYS OFFICIAL CALIFORNIA CODE OF REGULATIONS

Barclays Official California Code of Regulations Currentness
Title 10. Investment
Chapter 5. Insurance Commissioner
Subchapter 4.7. Private Passenger Automobile Rating Factors
Article 3. Rating Factors
10 CCR § 2632.11
§ 2632.11. Submission of Class Plans, Symbols, and Implementation Data.
(a) Every insurer offering or selling a policy of private passenger automobile insurance shall submit a class plan which complies with this subchapter to the Commissioner for review. The following shall apply to all class plans submitted in accordance with this subchapter:
(1) A class plan shall be considered to have been received by the Commissioner on the date that it is received by the Department's Rate Filing Bureau.
(2) Within 15 working days of receipt, the Commissioner shall review filings submitted pursuant to this subchapter for completeness. If the Commissioner determines that the class plan is not complete, notice stating the grounds for incompleteness will be given to the insurer within the 15 working day period and the filing of the class plan will be rejected.
(3) Rejection of the filing of a class plan for incompleteness shall not relieve any insurer of the duty to file a complete class plan.
(b) Class plans submitted for review shall contain a completed class plan application, in a form prescribed by the Commissioner, and underwriting guidelines.
(c) Eliminating the effects of gender as a rating factor.
(1) Revised class plan. In order to comply with the 2018 amendments to Section 2632.5 that become effective on January 1, 2019, insurers shall file with the Department no later than July 1, 2019 a revised class plan for each program of private passenger automobile insurance under which the insurer issues a “policy” as defined in Subdivision (a) of Insurance Code section 660. The revised class plan shall, in each case, be substantively identical to the most recently approved iteration of the class plan (hereinafter the “prior class plan”), except as provided in this subdivision (c)(1).
(A) The revised class plan shall eliminate all effects of gender as a rating factor, regardless of whether gender was used as a stand-alone rating factor, or in combination with any other rating factor, in the prior class plan. In its revised class plan the insurer shall demonstrate that the revised class plan complies with the weight ordering requirements stated in subdivision (d) of Section 2632.8 and subdivision (e) of Section 2632.5. The calculation of weights in the revised class plan shall be performed using the same distribution of vehicles as was used in the prior class plan.
(B) The analysis of rating factors pursuant to Section 2632.7 that was included in the prior class plan shall remain unchanged in the revised class plan.
(C) Where gender was used as a rating factor in combination with any other rating factor in the prior class plan, the revised class plan shall eliminate all effects of the use of gender as a rating factor.
1. The following steps shall be performed with respect to each combined rating factor that in the prior class plan included gender:
a. Use the same distribution of vehicles as was used in the prior class plan;
b. Separate the combined rating factor into its component rating factors and isolate one component rating factor at a time; the order in which each component factor is separated out and isolated in the revised class plan may differ from the order in which it was separated out and isolated in the prior class plan, except that the years driving experience component must still be separated out and isolated first;
c. Remove the gender component;
d. For each isolated component factor that remains, demonstrate compliance with the weight ordering requirements stated in subdivision (d) of Section 2632.8 and the individual weight ordering requirement stated in subdivision (e) of Section 2632.5; and
e. Recombine the relativities of the remaining component factors that had been combined with gender in the prior class plan, in order to calculate the relativities of the recombined rating factor, from which gender has been removed. For purposes of this Subdivision (c)(1)(C), a recombined rating factor may be comprised of a single factor.
2. The weights of all of the rating factors used in the revised class plan, when considered individually, must comply with the weight ordering requirements stated in Section 2632.8. The relativities of a recombined rating factor, from which the gender factor has been removed, may be pumped or tempered pursuant to subdivision (d) of Section 2632.8, if necessary in order to achieve this result. Alternatively, the relativities of one or more of the remaining component rating factors of a recombined rating factor may be pumped or tempered pursuant to subdivision (d) of Section 2632.8, if necessary in order to achieve compliance with the weight ordering requirements stated in Section 2632.8.
(D) The relativities assigned to any rating factor that in the prior class plan was not combined with the gender rating factor shall in the revised class plan remain unchanged from the prior class plan.
(E) The class plan application accompanying the revised class plan shall demonstrate that the change from the prior class plan to the revised class plan is revenue neutral, based on the current distribution of vehicles. In order for the change to be revenue neutral, there must be no projected change in premium for the book of business in question. A change in the base rate may be used in order to ensure that the change from the prior class plan to the revised class plan is revenue neutral.
(F) The class plan application accompanying the revised class plan shall illustrate the expected market dislocation resulting from the change from the prior class plan to the revised class plan. The calculation of market dislocation shall be based on the current distribution of vehicles.
(G) Subdivision (b) of this Section 2632.11 notwithstanding, the following application pages and supporting exhibits, and no other documentation, shall be included in the class plan application accompanying the revised class plan:
1. CP-1: General Company Information,
2. CP-2: Insurer Group Multi-Company Filing,
3. CP-4: Filing Checklist,
4. CP-5: Rating Factors Checklist,
5. CP-9: Rating Logic Samples,
6. CP-10: Market Dislocation Summary,
7. Exhibit 1 - Explanatory Memorandum,
8. Exhibit 2 - Filing History,
9. Exhibit 7 - Factor Weights,
10. Exhibit 8 - Revenue Neutral, and
11. Exhibit 12 - Complete Rate and Rule Manual.
For purposes of this subdivision (c)(1)(G)11., the insurer shall submit a marked-up copy of the rate and rule manual for the prior class plan, and a clean copy of the rate and rule manual, reflecting the removal of gender as a rating factor in the revised class plan.
(2) Exception. Insurers need not file a revised class plan pursuant to subdivision (c)(1) of this section for any program of private passenger automobile insurance in which gender is used neither as a stand-alone rating factor nor in combination with any other rating factor.
(3) Class plan applications submitted in the ordinary course; pending class plan applications. For any class plan filed with the Commissioner on or after January 1, 2019, the provisions of Section 2632.5 as that section was amended effective January 1, 2019 shall apply. However, for any class plan that was filed with, but that had not been approved or rejected by, the Commissioner before January 1, 2019, the provisions of Section 2632.5 as that section existed on the day the class plan was filed shall apply. In no event, however, shall a class plan that does not comply with Section 2632.5 as that section was amended effective January 1, 2019 be approved after June 30, 2019.
(d) Any class plan change approved by the Commissioner shall be implemented no later than 90 days after the date the plan is approved by the Commission. Implementation, as referred to herein, shall apply to both the issuance of new policies and renewals, and the implementation shall not result in unfair discrimination between insureds that are issued new and renewal policies.
(e) The Commissioner shall approve or reject a class plan submitted by an insurer within 90 days of the date a completed class plan application is received by the Commissioner.
(f) An insurer whose class plan has been rejected by the Commissioner may, within 30 days of the date of such rejection, request a hearing before the Commissioner. Such hearing shall be conducted in compliance with California Insurance Code section 1861.08, and the insurer requesting such hearing shall have the burden of proving that the rejected class plan complied with all applicable statutes and regulations.
(g) Any change to an approved class plan or values assigned to the rating factors, and any change to the values assigned to the make, model, value, cost of repair, or auto symbol for the insured vehicles requires the prior approval of the Commissioner. Proposed changes must be submitted with a class plan application.
(h) Every insurer that uses auto symbols for any vehicle must submit its methodology for determining such symbols, and all values and relativities associated therewith, to the Commissioner for approval prior to use. Any subsequent changes in methodology must also be submitted to the Commissioner for approval prior to use. Further, every insurer that uses auto symbols must submit the following to the Commissioner, annually, on a date to be agreed upon between the insurer and the Commissioner, or if no agreement is reached, on a date to be specified by the Commissioner:
(1) all auto symbols, and the values and relativities associated therewith, that the insurer proposes to use during the ensuing 12 months. For a new auto model which becomes available after the date upon which the submission is made, the insurer shall assign a symbol according to the insurer's approved symbol methodology, and the insurer may then commence using the symbol. Such symbols shall be submitted for approval to the Commissioner with the insurer's next annual submission of all auto symbols.
(2) data sufficient to support any proposed changes in auto symbols, or changes in the values or relativities associated with any auto symbols, including but not limited to, damageability studies;
(3) data sufficient to show the anticipated impact of any class changes in auto symbols upon the total revenue generated by the insurer's private automobile insurance business.
(i) Every insurer that does not use auto symbols, but which uses make, model, value, cost of repair, as factors in determining rates and premiums for private passenger automobile insurance must submit its methodology for determining such factors, and all values and relativities associated therewith, to the Commissioner for approval prior to use. Any subsequent changes in methodology must also be submitted to the Commissioner for approval prior to use. Further, every insurer that uses such factors must submit the following to the Commissioner, annually, on a date to be agreed upon between the insurer and the Commissioner, or if no agreement is reached, on a date to be specified by the Commissioner:
(1) All factors, and the values and relativities associated therewith, that the insurer proposes to use during the ensuing 12 months. For a new auto model which becomes available after the date upon which the submission is made, the insurer shall determine factors according to the insurer's approved methodology, and the insurer may the commence using the factors. Such factors shall be submitted for approval to the Commission with the insurer's next annual submission of all factors;
(2) data sufficient to support any proposed changes in such factors, or changes in the values or relativities associated therewith, including, but not limited to, damageability studies;
(3) data sufficient to show the anticipated impact of any changes in factors upon the total revenue generated by the insurer's private passenger automobile insurance business.
(j) Insurers may use auto symbols determined by advisory organizations that are in compliance with Insurance Code Section 1855, et seq. In lieu of the requirements of subpart (h) above, insurers shall submit to the Commissioner, annually, on a date to be agreed upon between the insurer and the Commissioner, or if no agreement is reached, on a date to be specified by the Commissioner, the following:
(1) a statement that the insurer proposes to use the symbols of an advisory organization;
(2) the identity of the advisory organization;
(3) sufficient information to identify the auto symbols of the organization that the insurer proposes to use.
Note: Authority cited: Section 1861.02, Insurance Code; and Calfarm Insurance Company v. Deukmejian (1989) 48 Cal.3d 805. Reference: Section 1861.02, Insurance Code.
HISTORY
1. Certificate of Compliance as to 3-17-94 order including repealer and new section transmitted to OAL 7-12-94 and filed 8-23-94; operative 9-22-94 (Register 94, No. 34). For prior history, see Register 94, No. 11.
2. New subsection (a) and amendment of Note filed 7-5-96; operative 8-4-96 (Register 96, No. 27).
3. Amendment of subsections (a), (a)(3) and (c)-(d) and amendment of Note filed 7-14-2006; operative 8-13-2006 (Register 2006, No. 28).
4. Repealer of former subsections (c)-(c)(8) and new subsections (c)-(c)(3) filed 12-31-2018; operative 1-1-2019. Submitted to OAL for filing and printing only pursuant to Government Code section 11340.9(g) (Register 2019, No. 1).
5. Change without regulatory effect amending subsection (a)(1) filed 8-27-2020 pursuant to section 100, title 1, California Code of Regulations (Register 2020, No. 35).
6. Editorial correction of subsection (c)(1)(C)2. (Register 2020, No. 50).
This database is current through 1/14/22 Register 2022, No. 2
10 CCR § 2632.11, 10 CA ADC § 2632.11
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