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An objection is a reviewer's request for something the filing did not give them: support, an explanation, a correction or a missing document. Each round adds time before a disposition, and some rounds lead to a reduced or withdrawn change. Many objections are predictable. They come from the same handful of gaps, and most of those gaps can be closed before submission.
This post walks through the most common reasons rate filings draw objections and what a reviewer generally wants to see in each case. Specific requirements vary by state, so check the state's own filing instructions and checklist for any filing you prepare. For how the objection process itself works, see SERFF objections.
Selected changes that differ from the indication
Reviewers compare the change you selected with the change your analysis indicated. When they differ, the filing needs to say why. A selection below the indication is often explained by competitive position or capping, but the reviewer still needs the reasoning. A selection above the indication, or a selected change by coverage or territory that departs from the indicated pattern, draws closer scrutiny.
Pre-empt it by showing indicated and selected changes side by side, at the overall level and at each level where you selected something, and by writing one or two sentences per departure that explain the basis. If you are taking part of the indication now and the rest later, say so.
Trend selections without support
Loss trend, premium trend and any severity or frequency components are common objection points. Reviewers ask which data the trend was fit to, which periods and fit types were considered, why the selected figure was chosen over the alternatives, and whether anything unusual in the data was adjusted for.
Show the fits you considered, not just the one you chose. State the trend period and the projection dates. If you relied on external data or a different line's experience, explain why it applies. The Actuarial Standards Board's ASOP No. 13 on trending procedures is a useful reference for what a complete explanation covers.
Credibility and the complement
When the experience is not fully credible, reviewers look at both the credibility standard and the complement. Common questions are why that standard was used, what the complement represents, and why the complement is a reasonable estimate for this book. A complement that is simply the current rate level, or a prior indication, needs an explanation of why it is unbiased for the period being priced.
State the credibility method and standard, show the resulting weights, and describe the complement and its source. ASOP No. 25 on credibility procedures sets out the considerations reviewers commonly expect to see addressed.
Expense and profit provisions
Fixed and variable expense provisions, commission, taxes, licenses and fees, and the profit and contingencies provision are often questioned when they change from the prior filing or are not tied to the company's own data. Reviewers ask where each figure came from, which years it reflects, and how fixed expenses are trended.
Tie each provision to a source exhibit, such as annual statement data or internal expense studies, and explain any change from the last approved filing. If the profit provision rests on a return target, show the calculation and the investment income assumptions behind it.
Rate impact and dislocation detail
An overall change can hide a wide range of individual impacts. Reviewers often ask for the distribution of policyholder changes, the maximum and minimum changes, and how many policyholders fall in each band. They also ask about capping, transition rules and how renewals will be handled.
Include a distribution of premium changes by band, the largest increases and what drives them, and the number of policyholders affected. If you cap changes, describe the cap and show its effect on the overall change.
Rating variable changes without support
New rating variables, new levels within a variable and revised relativities all need their own support. Reviewers ask for the analysis behind each change, whether the variable is permitted in the state, how it interacts with existing variables, and whether it could produce unfairly discriminatory results.
Support each changed relativity with the analysis that produced it, show indicated and selected relativities, and explain any tempering. For model-based changes, describe the data, the model form and the validation. ASOP No. 12 on risk classification is a common reference point.
Missing or inconsistent exhibits
Many objections are clerical. An exhibit referenced in the memorandum is missing. The overall change in the filing description does not match the rate exhibit. Premium totals differ between two exhibits. Experience periods are labeled differently in different places.
Reconcile every figure that appears in more than one place: the filing description, any rate data fields completed in SERFF, the actuarial memorandum and the exhibits. Confirm that every document the memorandum mentions is attached. For how exhibits typically tie together, see rate filing exhibits.
Redlines that do not match the narrative
The rate and rule pages, and their redlined versions, have to show exactly the changes the memorandum describes. Reviewers find base rates changed that the narrative does not mention, rules revised without explanation, or redlines that compare against a version other than the one currently on file.
Compare the redline against the last approved pages, not a draft, and walk through it alongside the memorandum so every marked change has a sentence that explains it and every described change appears in the redline.
Answering a different question than the one asked
Responses draw follow-up objections when they answer the question the filer expected rather than the one the reviewer asked. A request for the data behind a trend selection is not answered by restating the selection. A request about a specific territory is not answered with statewide figures.
Quote or restate each objection point, answer it directly, and attach or point to the exact page or exhibit that supports the answer. If you cannot provide something, say so and explain what you can provide instead. See the actuarial memorandum for how a clear memorandum reduces these exchanges in the first place.
Answering an objection point
Restate it
Quote or restate the objection point, so the answer addresses the question the reviewer asked.
Answer directly
Respond to that point, not the one you expected; statewide figures do not answer a question about one territory.
Point to the support
Attach or point to the exact page or exhibit that supports the answer.
Say what you cannot provide
If something is not available, say so and explain what you can provide instead.
Learn from public objection history
Public SERFF records of other carriers' filings often include the objection letters regulators sent and the responses filers gave. Reading them for your state and line is one of the most practical ways to learn what a reviewer tends to ask about and what kinds of answers closed the question. Public access varies by state and by filing, and confidential portions are withheld, but the correspondence that is available is worth reading before you submit. Our post on reading a competitor rate filing covers how.
Pre-submission checklist
- Indicated and selected changes are shown side by side, with a reason for each departure.
- Trend fits considered, the selected trend and the trend periods are shown and explained.
- The credibility standard, the weights and the complement and its source are stated.
- Each expense and profit provision is tied to a source, and changes from the prior filing are explained.
- The distribution of policyholder impacts, the maximum changes and any capping are included.
- Every changed rating variable or relativity has its own support.
- Every figure that appears in more than one place matches, and every referenced exhibit is attached.
- The redline is against the current approved pages and matches the memorandum change for change.
- The filing has been checked against the state's current checklist and instructions.
- Recent objections to similar filings in the same state have been read and addressed where they apply.