§ 4690. Licensing, operation, services, and activities of advisory or service organizations

(a) License required. No person or organization may provide any service listed in subsection (b) of this section relating to any insurance subject to this chapter, and no insurer shall utilize any service of such organization for such purposes, unless the organization has obtained a license under subsection (d) of this section as an advisory or service organization.

(b) Authorized activities. Any licensed advisory or service organization may perform one or more of the following activities on behalf of its affiliates:

(1) Collect, compile, and furnish loss data and related statistics concerning any type of insurance subject to this chapter;

(2) Collect, compile, and furnish expense data concerning commercial risk insurance, workers' compensation insurance, and employers' liability insurance and, as approved by the Commissioner, personal risk insurance;

(3) For commercial risk insurance, workers' compensation insurance, employers' liability insurance, dwelling fire insurance, personal liability insurance, and inland marine insurance, prepare, recommend, distribute, or file rates and pure premium rates, supplementary rate, and supporting information, or pure premium rate data with or without adjustment for loss development and loss trending, in accordance with its statistical plans where applicable. Such pure premium rate data and adjustments should be in sufficient detail so as to permit insurers to modify the pure premium rates based on their own rating methods or interpretations of underlying data;

(4) For private passenger nonfleet automobile and homeowner's insurance, recommend pure premium rates and supply supplementary rate and supporting information or pure premium rate data with or without adjustment for loss development and loss trending in sufficient detail to permit insurers to modify the pure premium rates based upon their own rating methods or interpretation of underlying data. The organization may not file any material or data for or on behalf of insurers for private passenger nonfleet automobile and homeowner's insurance with the Commissioner, unless the Commissioner approves the form of such material or data;

(5) Prepare and distribute manuals of rates and pure premium rates and rating rules and rating schedules that provide for the development of rates or provide for the development or calculation of rates with the addition of insurer information which is not ascertainable within the distributed manuals;

(6) Advise about rate and pure premium rate questions; and provide supporting information for the development and use of rates and pure premium rates;

(7) Prepare, recommend, and file policy forms and endorsements and consult with its affiliates relative to their use and application;

(8) Prepare, recommend, or file coverages, classifications, and statistical plans;

(9) Distribute any and all information that is filed with the Commissioner and open to public inspection;

(10) Conduct research and collect statistics in order to discover, identify, and classify information relating to causes or prevention of losses;

(11) Make inspections, surveys, and audits;

(12) Conduct research and on-the-site inspections in order to prepare classifications of public fire defenses;

(13) Provide actuarial, statistical, and administrative services to insurers and other insurer-supported organizations;

(14) Collect, compile, and distribute past and current prices of individual insurers' insurance contracts, if such information is made available to the general public;

(15) Conduct research and collect information to determine the impact of benefit level changes on rates and pure premium rates, and conduct research and report on other projects;

(16) Prepare and distribute rules and rating values for experience rating plans. Calculate and disseminate individual risk premium modifications;

(17) Assist an individual insurer to develop rates, supplementary rate information, or supporting information when so authorized by the individual insurer; and

(18) Furnish any other services related to those enumerated in this subsection, as specified in the organization's license issued by the Commissioner.

(c) Availability of services. No advisory or service organization shall refuse to supply any service for which it is licensed in this State to any insurer authorized to do business in this State and offering to pay the fair and usual compensation for the service; nor shall such an organization require the purchase of any specific service or services as a condition to obtaining the service sought, provided that the furnishing of the requested service does not otherwise place an unreasonable burden on the organization, except as prescribed by the Commissioner for workers' compensation and employers' liability insurance.

(d) Licensing.

(1) Application. An advisory or service organization applying for a license shall include with its application:

(A) a nonrefundable license fee of $1,000.00 payable to the Commissioner, except that the fee shall be $100.00 for such an organization whose principal business office is located in this State;

(B) a copy of its constitution, articles of association or incorporation, bylaws, and any other rules or regulations governing the conduct of its business;

(C) a list of its affiliated insurers, together with disclosure of the services provided to each; which list shall be maintained and updated and supplied to the Department at least annually;

(D) the names and addresses of one or more residents of this State, or the designation of the Secretary of State as a person, upon whom notices, process affecting it, or orders of the Commissioner may be served;

(E) written documentation of its technical qualifications or abilities; and

(F) any other relevant information and documents that the Commissioner may require.

(2) Change in material circumstances. Every organization which has applied for a license pursuant to this subsection shall promptly file with the Commissioner, not less than ten days after the effective date, every change in the material facts or in the documents on which its application and license was based.

(3) Granting of license. If the Commissioner finds that the applicant and the natural persons through which it acts are competent, trustworthy, and technically qualified or able to provide the services proposed, and that all other requirements of law are met, the Commissioner shall issue a license specifying the authorized activities of the applicant. The Commissioner shall not issue a license to any organization whose activities would tend to create a monopoly or to substantially lessen competition in any market segment.

(4) Duration. Licenses issued pursuant to this section shall remain in effect until the licensee withdraws from the State or until the license is suspended or revoked by the Commissioner. The Commissioner may at any time, after a hearing, revoke or suspend the license of an advisory or service organization which does not comply with the requirements and standards of this title. (Added 1983, No. 238 (Adj. Sess.), § 1; amended 1989, No. 128 (Adj. Sess.), § 5.)