20-356. Making of rates

All rates subject to this article shall be made in accordance with the following provisions:

1. Rates shall not be excessive, inadequate or unfairly discriminatory. No rate shall be held to be inadequate unless the director finds that the loss experience of the insurer in the classification covered by the rate has been adverse for a continuous period of not less than two years immediately preceding the date of such finding.

2. Due consideration shall be given to past and prospective loss experience within and outside this state, to catastrophe hazards, if any, to a reasonable margin for underwriting profit and contingencies, to dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders, members or subscribers, to past and prospective expenses within and outside this state and to all other relevant factors within and outside this state.

3. The systems of expense provisions included in the rates for use by any insurer or group of insurers may differ from those of other insurers or groups of insurers to reflect the requirements of the operating methods of any such insurer or group with respect to any kind of insurance, or with respect to any subdivision or combination thereof for which subdivision or combination separate expense provisions are applicable.

4. Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses.

5. Nothing in this article shall be construed to prohibit payment of dividends by insurers issuing policies on the participating plan, or by mutual or reciprocal insurers, but in the payment of such dividends there shall be no unfair discrimination between policyholders.

6. Except to the extent necessary to meet the provisions of paragraph 1, uniformity among insurers in any matters within the scope of this section is neither required nor prohibited.