The new rates are expected to be based on auto carriers’ 2020 pandemic loss experience
On March 11, 2021, the Division of Insurance issued “Property & Casualty Insurance Filing Guidance Notice 2021-A” on the subject of “Private Passenger Motor Vehicle Rate/Rule Filings for 2021.”
The stated purpose of the guidance notice is “to inform carriers of certain Division of Insurance (“Division”) expectations regarding the filing of Private Passenger Automobile (“PPA”) Rate/Rule Filings to take into account changing market dynamics associated with COVID-19.”
The guidance notes that in 2020, in response to its Bulletin 2020-05 (Flexibility in the Issuance and Administration of Insurance) on March 23, 2020, notifying carriers to work closely with policyholders to explore any and all feasible means to maintain existing coverage” that “carriers writing 98% of auto insurance in the Commonwealth distributed policyholder dividends, refunds or premium credits to reflect the changes in driving patterns.”
Issued guidance seeks to have new auto rate filings reflect the COVID-19 impact on auto loss development by June 30, 2021
Guidance Notice 2021-A notes that in 2020, almost every private passenger automobile carrier filed rules for insureds to obtain premium refunds or credits because of the pandemic.
The new Guidance notes that while carriers may continue to offer premium credits or refunds, the Division expects more. The Guidance states:
“[I]t is the Division’s expectation that each PPA carrier will submit a rate filing by no later than June 30, 2021, that includes 2020 claims and expense experience and a view of future loss trends.“
The Guidance further states that each carriers’ filing should detail how that carrier has adjusted its data based on the impact of COVID-19 on loss related factors including “traffic density, vehicle speeds, availability of medical care, delays in court proceedings, etc.”
The Guidance ends with the advice that the Division’s actuarial staff “will carefully review all filings to make sure that this experience is taken into account when calculating actuarially appropriate rates for 2021 and future years.”
