Open Competition Law
Form of state rating legislation that allows each property/liability insurer to choose between using rates set by a bureau or its own rates. Individual states regulate insurers and approve their property insurance rates. There are three methods of rate approval in addition to open competition: prior approval rating, modified prior approval rating and file and use. At one time the insurance industry operated like a cartel, with rates set by bureaus and filed with the insurance commissioners of each state. Experts believed that competition would result in either unfairly high rates or unreasonably low rates that would lead to mass insurance company insolvencies. But open competition became widespread after New York State adopted it in 1969.
Popular Insurance Terms
Expectations of investment return, mortality experience, and expenses used in projecting future cash values for life insurance and annuities. These projections cannot be part of the actual ...
Exchange of a new policy for one already in force. ...
Transfer of high severity risks through the insurance contract to protect against catastrophic occurrences. While insurance is generally not the most cost-effective means of recovery of ...
Procedure in Social Security that sets the benefit level for a dependent of a retired or disabled person who is receiving Social Security benefits. For example, if a retired or disabled ...
Means of providing insurance protection for the property of a business that is not at a fixed location. ...
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Disciplined approach to managing an insurance company's bond portfolio duration. When interest rates rise, the average maturity and duration of the bond portfolio is lengthened, resulting ...
Ratio of authorized control level risk-based capital of an insurance company to its total adjusted capital. This statistic determines regulatory action taken by the state's insurance ...
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