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Insurance & Reinsurance
On December 8, 2020, the Property and Casualty Insurance (C) Committee (the “C Committee”) of the National Association of Insurance Commissioners (“NAIC”) held a virtual meeting at the NAIC’s Fall 2020 National Meeting.
At the meeting, the C Committee adopted the Regulatory Review of Predictive Models White Paper (the “Predictive Models White Paper”), which can be found here.
As we have previously discussed (here and here), the Predictive Models White Paper has been developed by the C Committee’s Casualty Actuarial and Statistical (C) Task Force. As the predictive models used by the insurance industry have become more complicated and statistically advanced, state insurance regulators have faced the task of keeping up with the technology, modeling techniques and the use of complex models in insurance. The key objective of state insurance regulators when reviewing a rate filing that is based on a predictive model is, of course, to understand whether the predictive model and its usage complies with applicable state laws and regulations.
The Predictive Models White Paper states that it is only intended to provide guidance to state insurance regulators. As such, it does not have any direct or binding impact in any state unless a state chooses to use the guidance provided. However, as predictive models used by the industry continue to play an increasingly important role, the Predictive Models White Paper should prove to be a useful resource for state insurance regulators.