Notice Regarding the Need to Assess the Impacts of the COVID-19 Pandemic in Property and Casualty Rate Filing; Notice 2021-04
[51 Pa.B. 2363]
[Saturday, April 24, 2021]
Since the start of the novel coronavirus (COVID-19) pandemic, the Insurance Department's (Department) property and casualty actuarial staff have allocated significant resources in the rate filing review process on ensuring that the impacts of the pandemic have been appropriately accounted for in rate filings. Many questions have been asked regarding insurers' assessments of the impacts of the pandemic and how these impacts have been incorporated in the rates being requested. In many filings, the Department has also requested the insurer's monthly claim frequency statistics such that the Department can analyze the impacts on its own.
Calendar year 2021 has been met with great optimism as vaccinations are being administered in significant numbers across this Commonwealth. However, much has changed since the start of the pandemic and there will be lasting impacts on many insurance products. These impacts will continue to need to be analyzed and addressed in rate filings.
For example, it has been well established that telework is expected to continue even after a majority of Americans and residents of this Commonwealth are vaccinated. While there will be a return to the office for many workers, expectations are that various types of permanent telework arrangements (for example, work from home on certain days) will be at levels that far exceed that which existed prior to the pandemic. This will have a negative impact on miles driven, especially during high-volume commuting hours.
Insurers are therefore reminded that the lasting impacts of the pandemic continue to need to be accounted for in their rate filings. For those property and casualty insurance products impacted by the pandemic, insurers, rating organizations and third-party filers are instructed to include, within their rate filings, a specific section describing their analysis and assessment of the impacts of the pandemic on the product and how this has been accounted for in the filing. The filings should also include claim frequency statistics, by month, on both a Commonwealth and National basis. Five years' worth of claim frequency data should be provided (when available), inclusive of the most recent months in which it is available. The claim frequencies should be at equal stages of development such that the older data can be compared to the recent data. (Note that claim frequencies do not mean raw claim counts.) The data should be provided in Excel and be separated by coverage type (for example, liability and physical damage). If the filer believes that there is an offsetting impact to severity, severity statistics should also be provided in Excel.
For those property and casualty insurance products that insurers, rating organizations and third-party filers believe have not been impacted by the pandemic, rate filings should include a specific section describing why they believe there has not been an impact and be prepared to provide the previously-mentioned claim frequency statistics to support this assessment, if requested.
The Department will monitor the on-going impacts of the pandemic in this manner and will make an announcement when it believes the previously-requested information is no longer necessary to be included with rate filings.
Finally, note that it is not acceptable to base a rate change proposal on a rate level indication that ignores the impacts of the pandemic and then suggest that the pandemic's impacts have been accounted for by proposing a rate change that deviates from the rate level indication provided. The Department cannot evaluate a rate proposal on an invalid rate level indication.
Questions regarding this notice can be addressed to Michael McKenney, Property and Casualty Actuarial Supervisor, firstname.lastname@example.org, (717) 705-0166.
JESSICA K. ALTMAN,
[Pa.B. Doc. No. 21-652. Filed for public inspection April 23, 2021, 9:00 a.m.]
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