Marketing of Crop Hail Insurance in North Dakota in 1991

[LOGO] EARL R. POMEROY COMMISSIONER OF INSURANCE STATE OF NORTH DAKOTA 600 EAST BOULEVARD BISMARCK, NORTH DAKOTA 58505 701-224-2440 # BULLETIN 90-7 TO: ALL PROPERTY AND CASUALTY INSURANCE COMPANIES WRITING CROP HAIL INSURANCE IN NORTH DAKOTA FROM: Earl R. Pomeroy, Commissioner of Insurance DATE: December 17, 1990 SUBJECT: Marketing of Crop Hail Insurance in North Dakota in 1991 All insurance companies seeking to market policies for the coverage of crop hail insurance--including policies providing crop hail coverage as a supplement to multiperil crop insurance--within the state of North Dakota in 1991 must file policy forms and rates in accordance with the provisions of this Bulletin. All filings must be postmarked by March 1, 1991. The North Dakota Insurance Department will review crop hail policy form and rate filings according to the following criteria: 1. Except as otherwise provided herein, rates and forms for crop hail insurance shall be as filed by the National Crop Insurance Services (NCIS). 2. Companies seeking approval of rates which are lower than the NCIS rates must demonstrate that the reductions are derived from application of a cash discount and reductions in the administrative expense component of the NCIS filing. No deviations off of NCIS rates will be approved for projected loss ratios which are lower than NCIS's. (The Department has concluded that deviations in excess of 20 percent cannot be substantiated and will not be approved). a. The Insurance Department will recognize cash discounts offered for receipt of premium before July 1 or for payment in full with application for new policies written after July 1, provided the discount does not exceed 6 percent. (Companies desiring to offer larger cash discounts must substantiate amounts over 6 percent by demonstrating reductions in their administrative expenses.) Bulletin 90-7 December 17, 1990 Page Two will recognize cash discounts offered for receipt of premium before July 1 or for payment in full with application for new policies written after July 1, provided the discount does not exceed 6 percent. (Companies desiring to offer larger cash discounts must substantiate amounts over 6 percent by demonstrating reductions in their administrative expenses.) Bulletin 90-7 December 17, 1990 Page Two A cash discount will be allowed on policy changes after July 1, 1991, if the original policy was paid on a cash discount basis and payment is received with the change. 3. Rate filings must include the following: a. The company's pure loss experience and Expense Exhibits for the years 1988, 1989, and 1990. (Refer to Exhibit II). b. The company's proposed expense exhibit for the current year. (Refer to Exhibit I). c. A filing memorandum detailing your company's rationale for their request. d. A copy of the proposed rates. 4. Rate deviations shall apply statewide. 5. The purchaser of a crop hail insurance policy is entitled to receive the offer of the cash discount in the event the company provides therefore. Applications for crop hail insurance based upon filings providing the cash discount shall include notice to the purchaser specifically waiving his or her option to elect the cash discount in the event the purchaser declines to pay the premium by July 1, 1991. 6. No premium modification discount will be allowed which is based on total limits of liability of the policyholder. 7. Policy Form Filing: Companies proposing to use NCIS forms must file by reference, indicating by memorandum the list of forms they will use. (To include name, form number and edition date). Companies proposing to use independent policy forms must file a copy of each form along with a memorandum explaining how and where the policy differs from the NCIS form and what impact that makes on coverage and rate. orm Filing: Companies proposing to use NCIS forms must file by reference, indicating by memorandum the list of forms they will use. (To include name, form number and edition date). Companies proposing to use independent policy forms must file a copy of each form along with a memorandum explaining how and where the policy differs from the NCIS form and what impact that makes on coverage and rate. Companies proposing to use a deviated or modified NCIS form must file a copy of the form along with a memorandum explaining the change and how it affects the coverage and the rate. Bulletin 90-7 December 17, 1990 Page Three 8. Companion Hail Endorsement Endorsement 1988-CHIAA 653 is intended to be used in conjunction with the crop hail policy form to provide optional and supplemental coverages to the underlying MPCI or FCIC policy. Since the marketing of this form as a stand alone policy is contrary to its intended usage, such marketing will not be permitted. 9. Compliance Report for 1990 Those companies actively writing crop insurance in 1990 are required to complete and return to the Insurance Department the attached "Compliance Report for 1990 Crop Season" as a prerequisite to making the 1991 filing. Note: The deadline for this report is February 1, 1991. Remember: The filing deadline is March 1, 1991. LM/njb Attachments # Exhibit I # CROP HAIL RATE FILING # PROPOSED EXPENSE EXHIBIT 1991 | Expense Breakdown Based Upon Full NCIS Rate Scale | | Expense Breakdown Reflective of Company's Deviation | | | --- | --- | --- | --- | | | % | | % | | NCIS Loss Cost | 58.5 | NCIS Loss Cost | 58.5 | | Commissions | | Commissions | | | Loss Adjustment Expense | | Loss Adjustment Expense | | | Taxes | | Taxes | | | General Administration | | General Administration | | | Reinsurance or Reserve | | Reinsurance or Reserve | | | Profit | | Profit | | | TOTAL | 100.0 | TOTAL | | | Requested Crop and Companion Hail Deviation For This Year | | | | | TOTAL | | | | Commissions | | Commissions | | | Loss Adjustment Expense | | Loss Adjustment Expense | | | Taxes | | Taxes | | | General Administration | | General Administration | | | Reinsurance or Reserve | | Reinsurance or Reserve | | | Profit | | Profit | | | TOTAL | 100.0 | TOTAL | | | Requested Crop and Companion Hail Deviation For This Year | | | | | TOTAL | | | | Requested Cash Discount is ______________.* *Any excess over 6 percent must be offset in the above proposal. Company ________________________________________________________________________ Representative ____________________________________________________________________ Date _____________________________________________________________________________ FILING DEADLINE IS MARCH 1, 1991 # Exhibit II # LOSS EXPERIENCE AND EXPENSE EXHIBITS # FOR PRIOR YEARS | Category | 1988 | | 1989 | | 1990 | | | --- | --- | --- | --- | --- | --- | --- | | | $ Amount | % | $ Amount | % | $ Amount | % | | Crop Hail Premiums | | 100 | | 100 | | 100 | | A) Actual Losses | | | | | | | | B) Commissions | | | | | | | | C) Loss Adjusting Expenses | | | | | | | | D) Taxes | | | | | | | | E) General Administration | | | | | | | | F) Reinsurance or Reserve | | | | | | | | Profit | | | | | | | Total % (Categories A through G): Company Representative Date # COMPLIANCE REPORT FOR 1990 CROP SEASON NORTH DAKOTA STATISTICS ONLY (IN DOLLARS) Company: Deviation: Cash Discount: | POLICY | MPCI | COMPANION HAIL | CROP HAIL | | --- | --- | --- | --- | | Premium | $ | $ | $ | | Losses | | | | | Commissions | | | | | Loss Adjustment Expense | | | | | Taxes | | | | | General Administration | | | | | Reinsurance/ Reserve | | | | | Profit (Loss) | | | | Representative: Date: REPORTING DEADLINE IS FEBRUARY 1, 1991