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Bulletin No. 94-04

Reporting and exchange of loss and expense experience

Issued and entered May 23, 1994 by David J. Dykhouse, Commissioner of Insurance

Sections 2472 and 2664 of the Insurance Code of 1956, as amended, MCLA 500.2472 and MCLA 500.2664; MSA 24.12472 and 24.12664, provide, in pertinent part, that the Commissioner shall promulgate reasonable rules and statistical plans, reasonably adapted to each of the rating systems on file with him, which may be modified from time to time and which shall be used thereafter to the extent applicable to its particular rating system or systems, by each insurer in the recording and reporting of its loss and countrywide expense experience, in order that the experience of all insurers may be made available at least annually in such form and detail as may be necessary to aid him in determining whether rating systems comply with the ratemaking standards set forth in Sections 2403 and 2603 of the Code.

Rules 500.1204 and 500.1304, promulgated thereunder, state that the Commissioner may issue reasonable guidelines and procedures relating to the collection and reporting of data for purposes of evaluating rates and classifications or the extent and nature of competition. The guidelines and procedures shall provide for the option of using reasonable sampling techniques, when practicable, provided that any data thereby obtained are reportable in a uniform and consistent manner as may be required.

Section 438 of the Insurance code of 1956, as amended, MCLA 500.438; MSA 24.1438, requires each insurer transacting business in this state to annually, on or before March 1, prepare under oath and deposit with the Commissioner a statement concerning its affairs in a form and manner as prescribed by the Commissioner.

This annual statement contains significant statistical data about the insurer which the Commissioner may use to evaluate whether the ratemaking standards set forth in Sections 2403 and 2603 are satisfied. To the extent additional information is required after review of the annual statement, it can be obtained from the insurer through a specific request or the examination process. Insurers are required to maintain information concerning their rating and classification plans which shall be provided to the Commissioner upon request, and which may be considered by the Commissioner in evaluating whether an insurer's rates comply with the ratemaking standards set forth in Sections 2403 and 2603 of the Code.

After due consideration of the requirements of Sections 438, 2472 and 2664 of the Code, and R 500.1204 and R 500.1304, the Commissioner has determined that, except in regard to workers' compensation insurance, insurers authorized to transact business in this state shall not be required to report to the Commissioner or to any rating organization any data or experience described in Sections 2472 and 2664. Insurers are authorized to report such data or experience to licensed rating organization, but insurers are not required to make such reports.

This bulletin shall not be construed to relieve an insurer from complying with the statutory requirements of the Insurance Code. The Commissioner reserves the right to require the submission of statistical data if in the Commissioner's opinion he has reason to believe that examination of that data is necessary or desirable for the protection of the public.