Robert Lindquist President Lindquist and Associates Casualty Actuarial

Robert Lindquist- President Lindquist and Associates • • • Casualty Actuarial Society Ratemaking Seminar March 7 -8 2002 Tampa Fla. Regulatory Topic #37 Rate Filing Requirements 1

• Property and Casualty Rates • From Florida Perspective • Rates/Rules/Forms/ Underwriting Guide • Personal Property- H. O. , M. H. O. , D. F. 2

Structure/Environment • Insurance Commissioner. Currently Elected. Also Treasurer, State Fire Marshall, Cabinet. – Future, merged with Comptroller. Head will be State Chief Financial Officer 3

• Major Companies/Results – See Attached- MRKT Share by Line, L/R Results, Complaint Ratio – DI 4 -308 - Attached, Direct Profit/Loss Statement by Line Detailed 4

Structure/Environment • F. I. C. - Lobbying, Rade Musulin • F. H. C. F. - Florida Hurricane Catastrophe Fund – Personal Property, Commercial Residential – 90%, 75%, 45% – Cov. A+B+C, D? – Payout 1 out of 7 yrs. – Andy Rappaport – Jack Nicholson 5

• Primary Statutes 1. Personal Automobile 627. 0651 F. S. 2. Workers Compensation 627. 072 F. S. 3. All Other- 627. 062 F. S. 6

• 627. 062 F. S. - Rate Standards - Accepted Actuarial Techniques 90 day Deemer Components File/Use or Use/File Excessive/Inadequate/Unfairly Discriminatory Catastrophe Underwriting Expenses Indications, 5 yrs. Cal. /Acc. Yr. data Recourse (s) 7

• Supporting Statutes - 627. 0628; F. H. C. F. , Use of Models - 627. 0629; Construction; 3/03 ; Building Code ; Separate Hurricane /Non-Hurr. Rates - 627. 0654; Sprinkler Credits - 627. 701 ; Hurricane Deductibles - 627. 0645; Annual Rate Filings 8

Supporting Ad. Rules • • 4 -170. 013 - Filing Procedures 4 -170. 006 - Rate Manual Filings 4 -170. 007 - Annual Rate Filings 4 -170. 003 - Investment Income 9

Supporting Ad. Rules- Cont. • 4 -170. 014 - Homeowners Rate Making (Attached) - Direct - Fla. Data - # Filing Copies - Applicable Forms - Indications vs. Support 10

• Filing Format 3 copies to the Fla. D. O. I. Cover page Memo/Shirley Kerns Bureau Chief Consultant, Letter of Authorization 11

• Filing Forms DI 4 -582 (Basic) • Separate coverage forms from Rules/Rates/U. W. • One (1) Line per filing. • File/Use or Use/File • Proposed Effective date(s) – 45 days Renewal 12

• Filing Forms- cont. DI 4 -583; Use for adoption of I. S. O. Loss Costs (Not Rules) ; Calculation of Deviation ; Calculation of L. C. M. ; Minimum Premium/Return Premium 13

• Filing Forms- cont. DI 4 -585 -Certification DI 4 -586 -Annual Rate Filing Certification DI 4 -584 -Exemption to Annual Rate Filing 14

• Filing Forms- cont. DI 4 -595 - Expense Supplement for Independent Filings - E. L. R. - U. W. profit - Net cost of reinsurance - Private - F. H. C. F. 15

• Detailed Filing Memorandum Summarize Indexed Filing Material. Cross Reference Exhibits 16

• Indexed Filing Material (i. e. ) - Indications I. B. N. R. Factors Catastrophe Factor(s) Development Rate Comparisons (Attached) 17

• Indexed Filing Material – cont. - Other filings “me too” U. L. A. E. Support (Sch. P. ) Support for C. R. L. Support for Premium Trend and Loss Trend (Fast Track? ) 18

• Indexed Filing Material- cont. - New Manual Pages (Highlight) Non- F. H. C. F. Reinsurance Agreements M. G. A. Agreement 19

• Indexed Filing Material- cont. - DI 4 -1102, Rating Example by county Split Hurricane/Non-Hurr. - DI 4 -1103, Summary of overall % change by Form - DI 4 -1104, By Form by County % change (Example) 20

• Indexed Filing Material- cont. - If applicable the F. I. G. A. Recoupment (Invoice, check) - 7 Exhibits on Credits, Exhibit 7* “Cat Factor consistent with Ex Wind credits” *- 1÷ (1 -Ex Wind % Credit/ Load)= Cat Factor Ex Wind Cat Factor= 1. 00 21

• Computer Disks Homeowners (H. R. C. S. ) Dwelling (D. R. C. S. ) Automobile (A. R. C. S. ) Mobile Home (M. R. C. S. ) 22

• Some Frequently asked Questions - F. H. C. F. is tax exempt - Credibility Formula, Consistency - Complement of Credibility (95’ Joe Boor) - Support of credits that are not I. S. O. - Modeling, Black Box 23

• Some Key D. O. I. Employees Area Code 850 • Shirley Kerns 413 -5310 • Richard Koon 413 -5346 • Ken Ritzenthaler- 413 -5314 • Vern Ivarson 413 -5366 • Tim Bazer 413 -5378 • Kay Cleary 413 -5254 • Jack Swisher 413 -5344 • Srinivasa Ramanujam-413 -5354 • Bill Bodiford 413 -5352 24

• • • Tim Rundle 413 -5318 Howard Eaglefeld- 413 -5319 Doug Haseltine 413 -5330 Jim Watford 413 -5368 Jack Nicholson (F. H. C. F. )413 -1340 25