Section 27-26-36 Rating plans. - Alabama Statutes

Section 27-26-36

Rating plans.

(a) The rates, rating plans, rating rules, rating classifications, and territories applicable to the insurance written by the association and statistics relating thereto shall be subject to the same laws applicable to casualty policies, giving due consideration to the past and prospective loss and expense experience for medical liability insurance written and to be written in this state, trends in the frequency and severity of losses, the investment income of the association, and such other information as the commissioner may require. All rates shall be on an actuarially sound basis, giving due consideration to the group retrospective rating plan and the stabilization reserve fund, and shall be calculated to be self-supporting. The commissioner shall take all appropriate steps to make available to the association the loss and expense experience of insurers previously writing medical liability insurance in this state.

(b) All policies issued by the association shall be subject to a nonprofit group retrospective rating plan to be approved by the commissioner under which the final premiums for all policyholders of the association, as a group, will be equal to the administrative expenses, loss and loss adjustment expenses and taxes, plus a reasonable allowance for contingencies and servicing. Policyholders shall be given full credit on all investment income, net of expenses, and a reasonable management fee, on policyholder supplied funds. The standard premium (before retrospective adjustment) for each policy period issued by the association shall be established for portions of the policy period coinciding with the association's fiscal year on the basis of the association's rates, rating plans, rating rules, rating classifications, and territories then in effect. The maximum final premium for all policyholders of the association, as a group, shall be limited as provided in Section 27-26-30. Since the business of the association is subject to the nonprofit group retrospective rating plan required by this subsection, there shall be a strong presumption that the rates filed and premiums for the business of the association are not unreasonable or excessive.

(c) The commissioner shall examine the business of the association as often as he deems appropriate to make certain that the group retrospective rating plan is being operated in a manner consistent with this section. If he finds that it is not being so operated, he shall issue an order to the association specifying in what respects its operation is deficient and stating what corrective action shall be taken.

(Acts 1975, No. 513, p. 1148, §7(12)-(14).)