What are rates called that cannot be utilized until approved by the department or division of insurance?

Prior Approval Rates are those rates that must receive the approval of the state insurance department or division before they can be utilized by an insurance company. This regulatory measure ensures that the rates charged are fair, adequate, and not discriminatory. It protects consumers by allowing a government body to review and evaluate the proposed rates, helping to maintain market stability and consumer trust.

In many jurisdictions, insurers are required to submit their rate filings along with justification for the proposed rates, which may include data on claims history and loss projections. Only after carefully reviewing these submissions will the department grant approval, ensuring that the rates are aligned with state laws and regulations.

Open Rates refer to rates that can be implemented immediately without waiting for approval, typically used in very competitive markets. Standard Rates are commonly charged rates that may not require prior approval but are typically used as benchmarks. Fixed Rates are those that do not change for a set period and may or may not require approval, depending on the regulatory framework in place. Prior Approval Rates, however, specifically denote that regulatory approval is a prerequisite for their enactment.