Inside a state insurance department: how filings are reviewed

Who reviews a filing

Most departments split product review into property and casualty, life and health units, and within property and casualty they often separate rate review from form review.

• Rate and form analysts. Non-actuarial staff who check completeness, route filings, review forms against statutes and regulations, and handle many rule and form filings and simpler rate filings themselves. In some departments an analyst is the filer's main contact even on a rate filing that an actuary reviews.
• Staff actuaries. Review the actuarial support in rate filings: data, development, trend, indications, rating factor support and models. Departments vary widely in how many actuaries they employ.
• Chief or supervising actuary. Where a department has one, sets review practice, handles complex or high-profile filings and signs off on recommendations, and is often behind the department's actuarial guidance and checklists.
• Contract actuaries and consultants. Many departments supplement staff with outside actuarial firms, often for complex rate filings and models. Some states pass the cost to filers or the industry. Vermont, for example, bills filers for the reasonable costs of outside consultants hired to review filings, and Rhode Island's statute lets the department contract with consultants to study rate filings and assesses insurers for the cost.
• Managers and the commissioner. Approve or sign dispositions, decide policy questions and, in some states, preside over or appoint officers for hearings.

How a filing moves through review

The NAIC's Product Filing Review Handbook describes the typical sequence:

1. Intake. The filing is checked for completeness. A complete filing is assigned to a reviewer; an incomplete one may be rejected or met with a request for more information.
2. Review. One or more rate and form reviewers analyze the filing for completeness, compliance with laws and regulations, and any other factors that apply to the type of insurance.
3. Correspondence. If something is missing or noncompliant, the reviewer writes to the filer explaining the deficiencies. Some states set a deadline for the response. In SERFF this is the objection letter; see SERFF objections.
4. Disposition. When the filing complies, the reviewer approves or accepts it, or recommends that a manager do so.

Where a filing type requires it, review can include both actuarial analysis and legal review. Form reviewers may coordinate with rate reviewers so that related rate, rule and form filings take effect on consistent dates.

What a review typically covers

Completeness and fit

Reviewers first confirm the filing is what it says it is: the right filing type and type of insurance, the right companies, required transmittal documents, state-specific forms and checklists, fees, and every rate page, rule and form that changes. Many objections are completeness objections that a checklist would have caught. State filing requirements and checklists covers where those requirements live.

Rates and rules

For rate filings, reviewers test whether the support shows the rates are not excessive, inadequate or unfairly discriminatory, under whatever definitions the state uses. In practice they look at the data and its adjustments, loss development and trend, catastrophe and expense provisions, profit, credibility, the selected change against the indication, and the support for each rating factor and classification change. The NAIC handbook says regulators should focus on classification plan changes because of their potential impact on consumers' rates, and should watch for rating characteristics that state law does not allow. See Rate standards and The actuarial memorandum.

Reviewers also look at policyholder impact: the distribution of changes, the largest increases and any capping or transition rules.

Forms

Form review confirms the product meets the state's definition of the insurance, that the company is licensed for the line, that required provisions are present and prohibited ones absent, and that readability and other form standards are met. See Form filings.

What affects timing

How long a review takes depends on the state's rating law, the filing's complexity and the department's workload.

• The rating law. Prior approval states with deemer provisions put a statutory clock on review. File-and-use and use-and-file states may review after the filing is in use. See Prior approval, file-and-use and use-and-file.
• Completeness. Under the NAIC prior approval model, if a filing lacks its supporting information the department can request it, and the waiting period starts only when the information is furnished. Many state laws work the same way.
• Staffing and queue. Actuarial staff are limited and filing volume is uneven, so the queue in front of a filing matters. A complex filing, such as one introducing a new predictive model, may also wait for a consultant's review.
• Correspondence cycles. The handbook notes that much time can be lost waiting for correspondence in both directions. Each round of objection and response adds time, so a complete first submission is the most reliable way to shorten review.

Departments rarely publish standard review times. Treat any timeline you hear informally as anecdote, and plan around the statute and your own history with that department.

Bulletins and circular letters

Departments announce expectations through bulletins, circular letters, notices and filing guidance on their websites. These cover new filing requirements, interpretations of statutes, data calls, catastrophe-related moratoriums and positions on rating practices. Vermont, for example, lists bulletins on topics including price optimization in personal lines ratemaking alongside its filing procedures regulation and an actuarial indication checklist for homeowners and personal auto rate filings.

Practical habits:

• Read the department's current bulletins for the line before building a filing, and check whether older ones have been withdrawn or superseded.
• Look for state-specific actuarial checklists or exhibit templates; reviewers expect them to be used.
• Note bulletin numbers and dates in your file, because objections often cite them.

Public hearings

Most filings are decided on the documents. Some rating laws provide for hearings: the NAIC prior approval model lets an insurer request a hearing on a disapproval and lets an aggrieved insured request one on a filing in effect, and some states hold public hearings on large rate requests or allow intervenors. See Rate hearings and public input.

Communicating with reviewers

The NAIC handbook describes filing as a cooperative effort and says it is in both sides' interest to exchange information "with courtesy, promptness, and clarity." In practice:

• Use the filing record. Explain anything unusual in the filing description or a note to reviewer in SERFF so it stays with the filing. State plainly what changed, why, and where the support is.
• Answer the question asked. Quote the objection, respond point by point, and point to the specific exhibit or page that answers it. Update the affected exhibits rather than describing changes only in the letter.
• Call when it helps. A short call can resolve a misunderstanding faster than another letter round, especially on actuarial questions. Confirm what was agreed in writing in the filing afterward.
• Ask about extensions early. If you need more time to respond, or the department asks you to extend a review period, deal with it before the deadline.
• Stay consistent across states. Reviewers can see other states' public filings. An explanation that differs from the one given elsewhere invites questions.

After disposition

Disposition closes the review but not the department's interest:

• Implement what was approved. The approved or accepted rate pages, rules and forms, with any modifications, are what the company may use. Check the disposition date, effective dates and any conditions before implementation.
• Later review. Under the NAIC prior approval model, the commissioner can order a rate discontinued after a hearing if it no longer meets the law's standards, and an insured can request a hearing on a filing in effect. File-and-use states can disapprove filed rates after the fact.
• Market conduct. Examiners check compliance with filed rating plans, so differences between what was filed and what the rating system charges become a market conduct issue.
• The next filing. Reviewers often note concerns for the next filing rather than holding up the current one. The handbook says the department may notify the company so it can make modifications in future filings. Keep those notes and address them before you file again.