2006 Louisiana Laws - RS 22:1404 — Making of rates

§1404.  Making of rates

All rates shall be made in accordance with the following provisions:

(1)  Due consideration shall be given to past and prospective loss experience within and outside this state, to catastrophe hazards, if any, to a reasonable margin for underwriting profit and contingencies, to dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers, to past and prospective expenses both countrywide and those specially applicable to this state, and to all other relevant factors within and outside this state.

(2)  Rates shall not be excessive, inadequate or unfairly discriminatory.

(3)  Rates for casualty insurance to which this Part applies shall also be subject to the following provisions:

(a)  The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the requirements of the operating methods of any such insurer or group with respect to any kind of insurance, or with respect to any subdivision or combination thereof for which subdivision or combination separate expense provisions are applicable.

(b)  Risks may be grouped by classifications for the establishment of rates and minimum premiums.  Rates may be established on the basis of any classifications submitted by any insurer or group of insurers, provided such classifications are found to be reasonable.  Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both.  Such standards may measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses.

(c)(i)  A rate reduction of up to ten percent shall be authorized by the Louisiana Insurance Rating Commission, if actuarially justified, upon application of a rate filing by the carrier on motor vehicle liability and physical damage insurance where the insured and principal operator, regardless of age, produces certification from the National Safety Council or its registered cooperating agencies, evidencing successful completion of the National Safety Council Defensive Driving Course or certification of successful completion of a defensive driving course approved and certified by the Department of Public Safety and Corrections.  Should an automobile be used by multiple drivers, the rate reduction shall not be authorized on that automobile unless all those who drive the automobile complete such a course successfully.  The reduction provided for in this Section shall also be authorized for one or more motor vehicles owned and operated by parishes, municipalities, or other political subdivisions when the governing authority produces certification evidencing successful completion of such a course by all persons who drive said vehicles.  The Department of Public Safety and Corrections, Public Safety Services, office of state police may promulgate rules and regulations to establish criteria and standards for the approval and certification of defensive driving courses.  The expenses of the approval and certification process by the Department of Public Safety and Corrections shall be funded through an interagency agreement with the Department of Insurance, contingent upon the appropriation of funds by the legislature.

(ii)  The form of certification shall be as determined by the Louisiana Insurance Rating Commission.  The credit shall not apply to experience rated or assigned risk policies, or to policies subject to a discount for an approved driver education course sanctioned by the Department of Education, or required to pay a substandard risk surcharge for such insurance, or to any person whose enrollment in a defensive driving course resulted from a court order or sentence directing such enrollment.

(iii)  Such credit shall apply to new and renewal policies effective within a period of thirty-six months subsequent to the date of completion of the course.  Following such thirty-six month period, in order to again qualify for such credit, the course must be successfully repeated and evidence again presented.  A fee of one dollar or such other sum approved by the Louisiana Insurance Rating Commission may be charged by the National Safety Council, its registered cooperating agencies, or operators of any approved and certified defensive driving course for certifying course completion.  If the policy insures two or more automobiles the credit shall apply only to that automobile principally operated by a person who has satisfactorily completed such a course.

(d)(i)  The provisions of Subparagraph (c) notwithstanding, the Louisiana Insurance Rating Commission shall authorize an actuarially justified rate reduction, as determined by the carrier, upon application of rate filing by the carrier on bodily injury liability, property damage liability, and collision insurance where the named insured and principal operator is fifty-five years of age or older and produces certification from the National Safety Council or its registered cooperating agencies evidencing successful completion of the National Safety Council Defensive Driving Course or certification of successful completion of a defensive driving course approved and certified by the Department of Public Safety and Corrections.  Should a vehicle be used by multiple drivers, the rate reduction shall not be authorized on that motor vehicle unless all those who drive the vehicle are fifty-five years of age or older and have completed such a course.  The Department of Public Safety and Corrections, Public Safety Services, office of state police may promulgate rules and regulations to establish criteria and standards for the approval and certification of defensive driving courses.  The expenses of the approval and certification process by the Department of Public Safety and Corrections shall be funded through an interagency agreement with the Department of Insurance, contingent upon the appropriation of funds by the legislature.

(ii)  The reduction shall not apply to experience-rated or assigned risk policies or to any person eligible for a preferred rating plan or required to pay a substandard risk surcharge for such insurance or to any person whose enrollment in a defensive driving course resulted from a court order or sentence directing his enrollment.

(iii)  Such a reduction shall apply to new and renewal policies effective within a period of thirty-six months subsequent to the date of completion of a course.  Following the thirty-six-month period, the course shall be successfully repeated and evidence again presented in order to again qualify for such credit.  A fee of one dollar or such other sum approved by the Louisiana Insurance Rating Commission may be charged by the National Safety Council, its registered cooperating agencies, or the operators of any approved and certified defensive driving course for certifying course completion.  If the policy insures two or more vehicles, the reduction shall apply only to that vehicle principally operated by the eligible person.

(e)  An insurer who delivers or issues for delivery in this state comprehensive insurance coverage on a motor vehicle shall grant an actuarially justified discount in the amount approved by the Louisiana Insurance Rating Commission in the premiums charged for the comprehensive insurance for any motor vehicle when the vehicle identification number of the vehicle is etched into all of the windows of such motor vehicle.  The letters and numbers of the vehicle identification number shall be no smaller than one-eighth of an inch and shall be nonremovable and permanent.

(f)  A rate reduction shall be authorized by the Louisiana Insurance Rating Commission, if actuarially justified, upon application of a rate filing by the carrier on motor vehicle liability and physical damage insurance for coverage of any motor vehicle when the insured vehicle is equipped with daytime running headlights or headlights equipped to activate in inclement weather.

(4)  Rates for fire, marine, and inland marine insurance to which this Part applies shall also be subject to the following provisions:

(a)  Manual, minimum class rates, rating schedules or rating plans, shall be made and adopted, except in the case of specific inland marine rates on risks specially rated.

(b)  Due consideration shall be given to the conflagration and other catastrophe hazards, and in the case of fire insurance rates consideration shall be given to the experience of the fire insurance business during a period of not less than the most recent five-year period for which such experience is available.

(c)  For fire insurance rates, all insurers shall assign the fire protection grade of the fire servicing area where the property of the insured is located, provided that the property is located within seven road miles of the nearest responding fire department.

(5)  Except to the extent necessary to meet the provisions of Paragraph (2) of this Section, uniformity among insurers in any matters within the scope of this Section is not required nor prohibited.  Nothing in this Code shall be construed to prohibit any insurer from deviating upon proper approval under this Part from any loss cost established by a rating organization or the commission, provided the rate used is adequate; to prevent any insurer upon proper approval under this Part from issuing policies for periods of time and at rates approved by the commission; or from charging in addition to the premium a separate initial membership, policy, inspection fee, interim title insurance binder fee, or other similar charge.

(6)  The term "rate" as used in this Part shall include, as the context may require, either the premium to be paid by or charged to the insured for insurance, including fees and charges referred to in paragraph (5) of this Section, or the elements and factors forming the basis for the determination of the premium, including fees and charges referred to in paragraph (5) of this Section.

Acts 1958, No. 125.  Amended by Acts 1960, No. 296, §1; Acts 1975, No. 175, §1.  Acts 1983, No. 518, §1; Acts 1984, No. 816, §1; Acts 1984, No. 872, §1; Acts 1992, No. 654, §1; Acts 1995, No. 223, §1; Acts 1997, No. 724, §1; Acts 2001, No. 169, §1; Acts 2003, No. 456, §1; Acts 2003, No. 1093, §1; Acts 2004, No. 239, §1.