AIPSO Automobile Assigned Risk Pool Rate Adjustments

Bulletin 97-02 AIPSO AUTOMOBILE ASSIGNED RISK POOL RATE ADJUSTMENTS Alaska Order R96-06 was issued by the Division of Insurance on June 13, 1996, to inform all licensed casualty producers and all insurers authorized to do casualty business in Alaska that they are to act in accordance with the Alaska Automobile Insurance Plan as amended and effective on July 1, 1996, and any amendments approved by the director thereafter. This bulletin is intended to reemphasize Alaska Order R96-06, and to explain to producers and insurers the recent rate changes to the Alaska Automobile Insurance Plan which were approved by the director effective February 1, 1997. This bulletin is for informational purposes only and is not intended to be an exhaustive or interpretive analysis of all changes to the Alaska Automobile Insurance Plan. A summary of the recent changes follows. I. Alaska Automobile Insurance Plan, Alaska Automobile Insurance Plan Manual - Effective July 1, 1996 AIPSO revised the Alaska Automobile Insurance Plan (Plan of Operation) and the Alaska Automobile Insurance Plan Manual (Manual of Rules and Rates) effective July 1, 1996. All persons licensed for casualty line authority and all insurers authorized to transact casualty business in Alaska are required by Alaska Statute (AS) 21.39.040 to act in accordance with the amended and effective Alaska Automobile Insurance Plan and Plan Manual. If you have not received an updated AIPSO manual including the revisions effective July 1, 1996, or have questions on whether your manual is up to date, contact AIPSO at: 302 Central Avenue Johnston, Rhode Island 02919 Telephone (401) 942-9799 II. Personal Auto Rate Changes - Effective February 1, 1997 AIPSO revised the Personal Auto rates to reflect the most recent premium/loss experience available. The effect of the base rate change is an increase of 17.3 percent. In addition to the overall base rate change, the territory definitions are changed. The new territories are: ANCHORAGE Territory comprises that area for which the residences have the following ZIP Codes: TERRITORY 09 99501 thru 99524 99587 99654 99567 99645 99687 99577 FAIRBANKS Territory comprises that area for which the residences have the following ZIP Codes: TERRITORY 10 99701 99706 99709 99712 99702 99707 99710 99716 99703 99708 99711 99775 99706 SOUTHEAST/SOUTHCENTRAL Territory comprises that area for which the residences have the following ZIP Codes: TERRITORY 11 998** 99588 99639 99676 99729 99755 999** 99603 99643 99677 99731 99756 99550 99605 99644 99682 99732 99758 99556 99608 99663 99686 99733 99760 99566 99611 99664 99688 99737 99764 99572 99615 99667 99689 99738 99776 99573 99619 99669 99693 99743 99779 99574 99624 99672 99694 99744 99780 99586 99631 99674 99704 99754 99787 ** Areas for which the residences have ZIP Codes whose first three digits are 998 or 999. REMAINDER OF STATE TERRITORY 12 The biggest impact of the territory changes affects areas near to Anchorage. The original Plan definition of the Anchorage area was defined by Insurance Services Office, Inc., and has not been amended since the 1960s. The original definition did not include the Wasilla, Palmer, Girdwood, nor Chugiak areas. The Anchorage and surrounding areas have expanded, as has the road system linking all these areas. The redefinition better reflects the changing and expanding road system, and brings the Anchorage territory more in line with what is used by the voluntary market. The remaining territories are redefined to better reflect and group the communities and similar road systems and to align them more appropriately with the voluntary market. The redefinition of these other territories does not impact the premium as significantly as it does the redefinition of the Anchorage territory. III. Commercial Auto Rate Changes - Effective February 1, 1997 AIPSO revised the Commercial Auto rates to reflect the most recent premium/loss experience available. The effect of the base rate change is an increase of 3.7 percent. In addition to an overall base rate change, the territories are redefined as captioned above. The Commercial Auto base rate and territorial changes will be phased in over a three-year period. This phase-in will help minimize the premium swings for some risks, and will allow the division and AIPSO to review the commercial auto exposure distribution to be sure that the distribution assumptions included in the rate calculations are appropriate. The codes for the Anchorage and Fairbanks territories have been modified to facilitate the analysis of the distribution structures in these areas. Dated this 28th day of January, 1997. Marianne K. Burke Director of Insurance