Insurance Compliance Archives

The Future of Rate Filings

by Tim Perr

Listen to a podcast-style summary of this blog post

Introduction: The Coming Transformation of Rate Filings

For too long, the rate filing process has depended on people rather than systems. Every insurer has lived with some version of the same problem: a small group of analysts and actuaries who “know how it’s done,” spreadsheets scattered across shared drives, and institutional knowledge that travels with employees when they change roles or leave. The result is fragility with single-point dependency risk and a chronic lack of a single source of truth for filings data, documentation, and workflow history.

Even with the introduction of insurance state filings software like SERFF in the early 2000s and its upcoming “modernization,” this issue remains unresolved. SERFF’s mandate is deliberately narrow, designed to facilitate transmission of filings between insurers and regulators, not to manage the broader, interconnected product development and filing lifecycle. Because it primarily serves state departments of insurance, it offers little help with the internal and cross-functional workflows that dominate the filing process. And even if its new version proves more efficient for filers, it will inevitably fall behind in the fast-moving technology cycle we now inhabit.

Complicating matters, filings touch several major functions within an insurance organization. Actuarial, compliance, marketing, claims, and IT all need to know what is being filed, what the filing introduces or changes, and when those changes will take effect. During the filing process, multiple areas may also need to support regulatory activities, including preparing actuarial exhibits, drafting form changes, and responding to regulatory inquiries. Without integrated systems, these interactions are often disjointed, relying on ad hoc communication and manual tracking.

The real transformation will come from integrated, intelligent systems that combine automation, analytics, and AI. These technologies will not only eliminate manual tasks like uploading, indexing, and data entry, they will also centralize knowledge, coordinate stakeholders, assist with compliance, and preserve a continuous institutional memory from concept to approval. As insurers evolve, filings will no longer depend on a key employee’s knowledge or disconnected spreadsheets. Instead, they will flow through unified insurance state filings software platforms that are fast, highly automated, and resilient—where expertise is amplified by technology and data resides uniformly in one system rather than scattered across disparate drives (or filing cabinets).

At Perr&Knight, this vision is reflected in the development of PK1Cloud, a unified digital platform built to address precisely these challenges and lead the industry toward a smarter, more connected future.

The Inefficiency of Today’s Filing Process

Despite decades of incremental improvements, the filings process remains one of the most labor-intensive, fragmented, and risk-prone activities within the insurance industry. For many organizations, more than half of the time and effort spent on a filing has nothing to do with actuarial analysis or regulatory interpretation; it is consumed by manual mechanics such as uploading documents, indexing exhibits, entering data into SERFF, tracking correspondence, and maintaining version control. Each of these tasks creates opportunities for delay, inconsistency, or error.

Because most companies rely on a patchwork of shared folders, email threads, and spreadsheets, even simple filings can require extensive coordination to confirm which version of a document is current or whether an exhibit was approved.

This fragmentation extends beyond the filings team itself. Product managers, actuaries, compliance staff, marketing, claims, and IT all depend on accurate, timely information about what’s being filed and when. In addition, critical components of the filing process—such as reviewing state insurance codes and comparing proposed filings to competitor submissions—are still largely manual exercises. These activities are essential for compliance and competitive positioning, yet they consume significant time and are highly susceptible to human oversight. With structured data and AI, both can be automated or accelerated, allowing teams to focus on interpretation rather than repetition.

The inefficiency is compounded during regulator interaction. Preparing responses to inquiries or objections frequently requires recreating or re-collecting the same data, exhibits, and rationale because the supporting material isn’t centralized. This often includes the same time-consuming steps of verifying code requirements or researching competitor filings to justify a company’s position. Institutional knowledge about past filings, including why decisions were made, what worked, and what didn’t, often disappears when employees move on, i.e., traveling knowledge risk.

Today’s process is workable, but it’s fragile. It relies on human continuity rather than system continuity, and on institutional memory rather than data intelligence. Until that balance shifts, insurers will remain constrained by legacy workflows that limit speed, accuracy, and adaptability.

From Automation to Integration: The Next Leap

Technology, including AI, will dramatically reduce the time and effort required to create, submit, and support rate, rule, and form filings. Much of today’s filing workload can be fully automated through integrated systems and insurance state filings software.

What once required days of effort will be completed in hours, freeing actuaries, product experts, and compliance professionals to focus on higher-value work such as pricing strategies and product innovation. Intelligent systems can generate exhibits, align documentation, and produce outputs in the exact structure required by regulators, improving accuracy and consistency while reducing rework.

Fully integrated filing environments take this a step further by connecting every stage of the process—preparation, review, submission, and regulatory response—within a single system. The process becomes visible, traceable, and consistent, transforming what has historically been a fragmented, manual function into one that operates with manufacturing-like discipline and data-driven accountability.

From Silos to Systems: Coordinating Stakeholders

Every filing touches multiple teams, and each has a distinct interest in what’s being filed and when. Marketing teams need to know what is being filed and when it will go live so they can prepare producer communications and policyholder notices. Claims needs visibility into coverage changes that could affect claim-handling procedures. The IT department must know which rate tables, rules, and forms are being revised so that the rating and issuance systems can be properly programmed and tested.

In the current environment, this coordination often depends on meetings, emails, and personal follow-up, which can be a slow and error-prone process. Modern, integrated filing systems, by contrast, allow for automated notifications, integrated calendars, and dependency tracking. Each department can see precisely what stage the filing is in, what it changes, and when implementation is expected. This ensures synchronization across the organization, reduces operational risk, and shortens the cycle from regulatory approval to market launch.

By connecting stakeholders through shared data and automated communication, the organization gains operational alignment where everyone is working from the same playbook, at the same pace, toward the same deadlines.

Archival and Institutional Memory

A modern state filings system doesn’t just manage filings; it remembers them. Unlike SERFF’s static, PDF-based recordkeeping, an integrated insurance state filings software platform can archive the entire workflow: correspondence, analyses, internal notes, version histories, decision rationales, and even bureau adoptions. This is far more valuable than a simple record of what was filed. It is a dynamic record of how it was done.

Such a system creates true institutional memory, enabling teams to retrieve not just the final product but the reasoning behind it. Future filings can draw upon this archive to anticipate regulatory questions, reuse templates, and ensure consistency across states and product lines. It transforms recordkeeping into knowledge management.

Building Resilience: Eliminating Single-Point Dependency

Modern filings platforms also strengthen organizational resilience. By systematizing the process, they remove single-point dependency risk: the exposure that arises when institutional knowledge resides in a single individual or small team. Insurance state filings software replaces this vulnerability with a single source of truth that is always accessible, always current, and always auditable.

The benefits extend beyond risk mitigation. When data, exhibits, and correspondence are centrally stored and version-controlled, employees can transition between roles without disrupting operations. Knowledge no longer travels with individuals; it stays with the organization. This continuity enhances both efficiency and governance, ensuring that expertise compounds over time.

The Human Factor: Evolving Roles

As automation handles the mechanics, the human role in filings will shift toward interpretation, judgment, and oversight. Actuaries will focus less on producing exhibits and more on validating assumptions and communicating analytical insights. Compliance experts will spend less time chasing documents and more time shaping strategy. Product teams will gain more bandwidth for innovation because their filing support will be faster and more reliable.

In this model, technology doesn’t replace expertise; it amplifies it. The professionals who understand the regulatory and actuarial nuances will remain indispensable, but they will operate in an environment that enables their insights to scale.

Conclusion: The Reimagined Filing Ecosystem

The next decade will redefine how rate filings are done. The combination of automation, integration, and AI will transform the process from a collection of disconnected manual tasks into a unified, intelligent workflow. Insurers that embrace this transformation will see faster cycle times, fewer errors, greater compliance, and ultimately a sustainable competitive advantage.

For regulators, modern insurer compliance systems will yield a clearer, more data-driven view of the filings they review, enabling faster approvals and more consistent oversight. For insurers, it will mean a world where filings are not just faster—they’re smarter. Compliance will be embedded, not appended, and systems (not solely people) will safeguard important knowledge.

At Perr&Knight, this vision is already coming to life through PK1Cloud, our unified platform designed to simplify complexity across the entire product and filing lifecycle. PK1Cloud centralizes data, automates key workflows, communicates key milestones to all stakeholders, and integrates AI-driven analytics to enhance accuracy, speed, and compliance. It also connects with trusted third-party data sources for insurance code validation and competitor rate and form filings, enabling real-time benchmarking and compliance verification.

The filings process has long been viewed as a necessary administrative burden. While regulation will always remain a fundamental part of the insurance landscape, the burden it imposes can be reduced. With solutions like PK1Cloud, that reduction is not theoretical—it’s already underway. Intelligent, integrated systems are transforming filings from a back-office necessity into an efficient capability that strengthens compliance, accelerates innovation, and connects insurers and regulators in a continuous cycle of improvement.

Contact us today to learn more about how Perr&Knight’s proprietary insurance state filings software, PK1Cloud, can help your organization get a head start on the future of filings.

Testing of Policy Admin System Output Is Essential for Compliance

by Scott Whitaker

For insurance carriers, program administrators, MGAs, and the like, the accuracy of policy administration systems (“PAS”) is crucial, not only for profitability and policyholder retention, but also for compliance. Every form, notice, and rate/premium that leaves a PAS must align with what was filed with the Department of Insurance (“DOI”).

Regulatory scrutiny doesn’t end when a filing is approved. Through market conduct exams, regulators also scrutinize whether what was issued and charged matches the forms, rates and rules that were filed. The NAIC Market Regulation Handbook outlines standards insurance companies must adhere to, including: “All forms, including policies, contracts, riders, amendments, endorsement forms and certificates are filed with the insurance department…” and “The rates charged for the policy coverage are in accordance with filed rates…”.

This provides examiners with a clear playbook to follow during a market conduct exam: compare issued forms and rates to approved filings. Here’s what our insurance compliance consulting experts want you to know about taking a proactive approach to market conduct exams.

Why Testing Matters

Discrepancies between approved and utilized materials are among the most frequent findings our insurance consulting team has seen in market conduct exams. Common pitfalls include:

Policies rated with unfiled factors or outdated tables
Use of non-approved consent or disclosure forms
Notices missing state-mandated language

When there is a gap between what is filed and issued, the consequences can be substantial, including policyholder restitution, interest, fines, mandated remediation, and reputational damage. The good news is: a disciplined program of regular testing closes the gap, facilitates compliance, and readies you for all types of market conduct activity.

Exempt From Filing Does Not Mean “Off The Hook”

Some lines of business are exempt from form and/or rate/rule filing requirements in certain states. That doesn’t mean state-specific coverage requirements don’t apply. Rather, it simply means the materials do not need to be filed with the DOI before they are issued. Insurers still carry the burden of making sure their materials comply with state requirements and they are still subject to regulatory scrutiny in the form of a market conduct exam.

When filing exemptions apply, rather than comparing issued forms and rates to approved filings, examiners will compare them to state insurance laws and regulations during the market conduct examination. If discrepancies are found, companies may still be subject to consequences.

How To Structure Regular Testing

Building a sustainable, repeatable testing program isn’t rocket science. In fact, during our decades of insurance consulting, our product design experts have identified these five key components that are essential to any testing program:

Baseline library Maintain a centralized location that retains all filed forms, rates and rules, with version control, for comparison.
Scenario-based testing Run end-to-end transactions (quote → bind → issue → bill → renew → cancel) on a sample of risks to capture all system outputs.
Premium calculation check Recalculate premiums for a cross-section of risks using filed rate manuals, and reconcile them to what was charged, reconciling to the penny.
Form generation and content validation Confirm the system attaches the correct forms, applies approved variability, and inserts all required disclosures.
Regular cadence Perform regular testing, prioritized based on risk factors that may include: high-volume products, active DOIs, known previous issues, product updates (e.g., recent filing activity).

Benefits of Proactive Testing

The benefits of proactive testing far outweigh the time and expense. In addition to preventing costly exam findings, proactive testing provides the following additional benefits:

Demonstrates disciplined compliance control and a strong governance framework that regulators respect
Improves speed-to-market by reducing last-minute compliance fixes and re-filing delays
Strengthens collaboration between compliance, actuarial, and IT teams, ensuring aligned implementation
Provides executive leadership with confidence that compliance risk is proactively managed
Builds trust with regulators and policyholders by showing transparency and consistency
Protects brand reputation through accurate, compliant policy issuance at every stage of the product lifecycle

How Testing Supports Statistical Data Reporting

Accurate PAS workflows and outputs do more than just ensure filed-to-issued compliance. They are also the foundation of statistical data reporting compliance with regulators and statistical agents. Regular testing helps:

Premium & exposure accuracy

Confirm that premiums generated align with risk classifications, coverages and filed rates for each policy transaction to prevent misreporting of earned/written premium and exposures.

Form and rating component reporting

Ensure the data within policy forms and rating component details are accurately captured and flow downstream to the statistical reporting sources and reports.

Policy and claims linking

Validate that claim and policy data are linked at the policy, risk classification and coverage level and can be traced back to filed policy statistical data, supporting actuarial reviews of statistical submissions.

Regulator trust

Reduce the risk of DOI inquiries, costly resubmissions and data quality penalties, or corrective action associated with inaccurate data capture.

By integrating output testing with data reporting, insurers create a closed loop: filed forms and rates drive system output, which in turn drives compliant statistical submissions.

Insurance Consulting Experts Can Help

Partnering with credentialed, experienced insurance compliance consulting professionals like Perr&Knight can help you get ahead of any market conduct exams your company might face. Our product design experts have experience with regulatory requirements in all jurisdictions and can provide guidance and support to help design or evaluate your testing program.

Contact the team at Perr&Knight today to discuss your policy administration testing.

A Smoother Path to Reporting Legal/Regulatory Actions Against Insurance Agents and Agencies

by DJ Lopez

Reporting legal or regulatory actions against insurance agents or agencies is a critical but often misunderstood part of maintaining compliance in the insurance industry. Insurance licensing requirements are clear: any type of action against an individual agent or agency must be reported.

Actions against an insurance agent or agency are not uncommon, but failure to report can result in the accumulation of fines and can delay approvals of new or renewal licensing applications.

Though not complicated, reporting actions can be time-consuming, especially when it involves multiple jurisdictions.

Why Does Reporting of Actions Matter?

The insurance industry is based on trust, so integrity and transparency are crucial. Here are some of the reasons reporting is essential:

Ensures Legal and Regulatory Compliance

Insurance agents are often required by law to report any administrative actions taken against them (e.g., fines, license suspensions) to their domicile DOI. Failure to report an action may result in further penalties, including license suspension or revocation.

Promotes Uniformity in Licensing

All DOIs participate in the National Association of Insurance Commissioners (“NAIC”) and the National Insurance Producer Registry (“NIPR”). These entities promote uniformity in the licensing process through reporting transparency in all jurisdictions. This prevents agents from “license shopping” or hiding past infractions by moving from one jurisdiction to another.

Builds Trust with Consumers

Insurers and customers rely on agents and agencies to act in their best interests. Reporting actions is a means of helping regulators to monitor an agents conduct. Knowing that regulators are aware of actions against agents or agencies, provides consumers with peace of mind that they are being protected from fraudulent or unethical behavior.

Upholds Professional Integrity

Agents who are quick to report actions show that they understand the importance of protecting their reputations through honesty and transparency. Reporting demonstrates their commitment to high ethical and professional standards, even if they have found themselves on the wrong side of a disciplinary action. Reporting actions in a timely manner demonstrates their willingness to face the consequences – two desirable characteristics for agents.

Demonstrates Ethics of Agency Officers

Unlike agents, officers or director-level staff of an insurance agency are held to slightly more stringent standards. In these cases, actions issued against individual officers also become attached to the agency itself. For insurance professionals occupying these positions, reporting is critical as failure to report – even actions that happened well in the past – could negatively impact the agency’s reputation.

Initial Licensing vs. Renewals: Differences in Reporting

Keep in mind that questions slightly differ among the initial licensing application versus the renewal application. For example, an initial application asks, “Has anything ever happened?…” versus a renewal application, which asks, “Has anything happened since the last renewal that you did not already report?” This is why staying on top of reporting is essential.

Avoid Compounding Effects

An administrative action in one state might trigger a similar action in another state where the agent is also licensed. Since many agents are licensed in multiple jurisdictions, being proactive about reporting in all areas will reduce quickly compounding negative consequences.

Illustrative example:

An agent received a jaywalking ticket while traveling to another state. The agent didn’t pay the ticket, which led to a warrant for their arrest and a misdemeanor on their record. The agent also forgot to report the ticket to their resident licensing state. Upon discovering the misdemeanor, the state issued an action for the agent’s failure to report. Then, other states issued their own actions for the same reason – the initial failure to report created a domino effect. This small event turned into a significant administrative and financial burden simply because it wasn’t handled quickly.

This kind of scenario, while seemingly small, highlights the importance of reporting even minor infractions to avoid escalating issues or delays with insurance licensing renewals. It’s better to report as timely as possible, so regulatory authorities are notified proactively rather than discovering an action after the fact.

Steps to Stay Compliant

Most actions do not result in a license cancellation/revocation, but failure to report causes delays. When reporting actions, here are some valuable tips to keep in mind.

Read the questions carefully and answer honestly. DOIs are primarily concerned with offenses involving dishonesty, breach of trust, or financial misconduct, such as fraud, embezzlement, and theft. An attestation question might look like this: Have you ever been convicted of a misdemeanor, had a judgment withheld or deferred, or are you currently charged with committing a misdemeanor? These could impact a license application, but more often, incorrectly answering “No” to an attestation question could delay your application by months. For entities, similar questions apply to the agency’s directors and officers, and the same principles apply to individual licensees at the director level.

Go as far back as you can. The actions we see often are usually minor, often stemming from youthful mistakes (e.g., DUIs, petty theft, bar fights). Most actions usually have no statutory timeline, which means agents will be expected to report infractions from their “younger years,” including college and the time before they were licensed as insurance agents. It should be noted that juvenile records are excluded from the reporting requirements.

Report promptly. Reduce the risk of oversight by reporting the action in a prompt fashion right after it happens. Don’t wait until your license is up for renewal to report. DOIs generally allow 30 days to report an action to the NIPR Attachment Warehouse. Working with insurance licensing professionals like Perr&Knight can offload the detail-intensive task of managing agent and agency license renewals to ensure nothing slips through the cracks. We have decades of experience navigating the NAIC and NIPR systems. We can also directly reach out to DOIs and correspond with the examiners to report actions as needed.

Consult with insurance compliance consultants. Experts like the team at Perr&Knight can help answer questions about reporting actions. Though not legal advisors, our experience reporting actions in all U.S. jurisdictions can help smooth the process, especially if an agent is licensed in multiple states.

Most actions are minor but create unnecessary administrative headaches. Reporting administrative actions is a necessary part of compliant insurance operations. However, keeping these strategies in mind can help avoid delays in licensing or renewals so you can get on with business.

Contact Perr&Knight today to discuss your insurance licensing support needs.

Streamlining Compliance: Managing Bureau Changes through Automation

by Perr&Knight

Staying updated with bureau changes is crucial for insurance companies. Non-compliance carries significant risk of adverse consequences, including legal issues and financial penalties.

However, for insurance companies with multiple lines of business across many jurisdictions, manually monitoring bureaus like ISO and NCCI can eat up valuable time and present many opportunities to miss critical filing updates.

As seasoned providers of insurance compliance services, we have spent decades developing greater efficiencies in monitoring bureau updates for our clients. A key element of our process is Bureau Monitor, a subscription service tool contained within our StateFilings.com solution.

Bureau Monitor streamlines the bureau update process by centralizing circulars, keeping clients informed, and providing recommended filing actions and statuses for all circulars. Features include tracking bureau filing numbers, effective dates, and providing links to circulars.

Here are insights from our insurance compliance services team on how to use time-saving automation tools like Bureau Monitor to reduce the risk of slipping into non-compliance.

Volume and Frequency of Update

There is a variation in the frequency of updates from different bureaus, such as ISO’s frequent updates, versus less frequent ones from other bureaus. This constant stream of proposed changes and new regulations can be overwhelming for compliance departments to track. All these changes increase the risk of missing updates from less active bureaus. The compliance team at Perr&Knight reviews each bureau site frequently to ensure that new circulars/bulletins are documented and made available on Bureau Monitor, regardless of the frequency.

Accurate Information

Responding to new compliance requirements involves lots of moving parts – components like state laws, bureau filing authority, and company’s authorization. These are all unique to each company and line of business. There are, at times, significant complexities involved in understanding and complying with different state filing laws. Perr&Knight’s team updates Bureau Monitor with relevant information to ensure users are seeing the most accurate and relevant requirements.

Avoiding Compliance Gaps

Updates to policy writing and rating systems must be made in a timely manner to avoid compliance gaps. Falling behind on bureau updates can lead to chaos within regulatory compliance departments. The team at Perr&Knight monitors regulatory changes (proposed and enacted) and updates the system accordingly. Users see only the updates relevant to their lines of business.

Compliance and state filings departments are alerted to required actions regarding adoption/non-adoption, delay filings, documentation, and more. Because Bureau Monitor is part of StateFilings.com, users can also connect bureau updates to specific SERFF tracking numbers once the update is filed.

Benefits of Automation

Automating bureau monitoring has been a game-changer for compliance departments. Here are some of the ways automation through Bureau Monitor helps:

Saves time – Bureau Monitor relieves the administrative burdens and saves time for compliance departments, allowing them to focus on bigger-picture strategic issues.
Establishes a clear process – Managing bureau updates requires a clear, documented process. Bureau Monitor can help facilitate workflows and establish best practices.
Improves accuracy – Automation reduces the risks associated with relying on ad hoc systems like spreadsheets and emails to track bureau updates.
Streamlines communication – The ability to add notes enables users to include comments that remain in a single repository, not buried in old emails.
Provides end-to-end tracking – Users can see the entire life cycle of bureau updates, from proposed changes through to filing status (as part of StateFilings.com).
Increases decision-making efficiency – Centralized and automated services like Bureau Monitor improve decision-making efficiency by providing all necessary information in one place. All stakeholders can access the information they need to avoid missed deadlines and compliance issues.
Enhances internal processes – Centralizing bureau updates provides useful information to help companies manage policy writing and rating system changes.
Delivers key information – Customizable dashboard views and reports let users sort and view specifics on filing actions, jurisdictions, effective dates, etc.

Centralized Record-Keeping

Consolidating bureau updates on a single platform enables company stakeholders and compliance department staff to rely on a single source of truth for the entire life cycle of an update, from proposed change through to filing and implementation status. This detailed compilation of information saves significant time collecting information in the event of an internal or Department of Insurance inquiry or exam.

Efficiently managing bureau updates is essential for every insurance company – but the process can be time-consuming. Automation tools like Bureau Monitor help compliance departments get even further ahead by monitoring, tracking, and storing updated information in a single repository that saves time and reduces the risk of compliance violations.

Contact the experts at Perr&Knight to learn more about Bureau Monitor and how our insurance compliance services can further support activities related to your bureau updates.

How to Navigate Licensing for Insurance Startups

by DJ Lopez

Navigating the world of insurance licensing can be daunting, especially for insurance startups. A non-negotiable foundation for compliant and successful insurance operations involves obtaining and maintaining proper licenses. This article outlines the complexities of insurance licensing and provides insights from our team of experienced compliance professionals to help your startup thrive.

Maintaining current licenses is more than a formality – it safeguards your business

Soliciting, negotiating, or selling insurance products requires proper licensing to operate legally. Without the appropriate licenses in place, you risk facing penalties, fines, reputational harm, and legal consequences.

Insurance is heavily regulated, and licensing requirements differ significantly by jurisdiction. To operate legally and expand your market reach across state lines, you must secure and uphold the appropriate insurance licenses. This not only ensures compliance with varying state regulations but also reduces your risk, safeguards your reputation, and fosters trust with your customers.

Maintain good standing and facilitate growth

All carriers require individuals and entities that solicit, negotiate, or sell insurance on their behalf to maintain active licenses. Failing to maintain appropriate and active licenses may result in losing valuable agency appointments with a carrier. This limits the range of products your entity can offer and may jeopardize future growth opportunities and possibly your entity’s financial status.

Licensing criteria frequently includes background verifications, educational requirements, and additional qualifications. Verifying that your entity and those who solicit, negotiate, or possess the appropriate active licenses assures your customers that they are interacting with competent, ethical experts who understand the nuances of numerous insurance requirements. A strong reputation can lead to increased client trust, referrals, and business growth – all crucial for a startup’s success.

Time-consuming, detail-heavy

Monitoring and maintaining licenses and appointments can be time-consuming, particularly if your business operates across multiple states. This effort is magnified when managing licenses for multiple producers. The sheer scope of the administrative load often leads to license and appointment gaps, which leads to compliance risks.

Entities that initially manage licensing renewals through calendar reminders and Microsoft Excel spreadsheets can run into problems as their workforce grows and business evolves. Expanding workloads, knowledge gaps, and the risk of critical information loss due to staff turnover make maintaining accurate and up-to-date licenses challenging. Simple desktop tools quickly become insufficient to track renewals accurately.

The value of outsourcing to experts

Perr&Knight has developed a suite of licensing and appointment services born out of decades of supporting entities across the country. Our insurance licensing department is staffed by experts who understand the state-by-state nuances and is supported by License Reporter, an encrypted, innovative online database, available 24/7.

The onboarding process is easy for our clients. We work closely with the appropriate client contacts to collect all the necessary information for current producer licenses, providing the appropriate forms. We collect these forms and then enter the data into License Reporter.

Working with Perr&Knight and using License Reporter streamlines the licensing process. We provide detailed progress reports showing renewal statuses to assure all stakeholders. The insurance compliance professionals in our licensing department also oversee employment changes when agents leave or new staff members join the team, ensuring a smooth transition for new staffers with no disruptions.

In addition to day-to-day licensing management, we also focus on identifying potential roadblocks that could affect agent licensing down the line. This proactive approach helps you avoid future issues by ensuring all licenses are current and your agents have the appropriate licenses to sell the policies your business offers.

In a regulation-heavy sector like insurance, businesses operating across state lines face a patchwork of varying licensing standards that can quickly become overwhelming. The cost of non-compliance is steep, from tarnished reputations to significant financial setbacks. Perr&Knight’s experienced insurance compliance consultants can help your entity stay on the right side of the law so you can focus on better serving your clients and scale your business with confidence.

Contact Perr&Knight today to learn more about our insurance licensing services.

Five Benefits of an Expert Review of Your Rate/Form Filings

by Brett Horoff

Have you had a filing disapproved in Florida or New York?

Are you receiving multiple objection letters on your California filing identifying items that do not comply with state requirements?

Do you struggle with providing the required actuarial support in Washington?

You are not alone.

It is incredibly difficult for companies to keep up with each state’s requirements. Most companies do not submit enough filings or have the consistent communication with the Departments of Insurance (“DOI”s) to gain the expertise needed to handle certain states without consulting an expert.

If you work for a large insurance company, you may have a pre-filing meeting with the DOI to discuss your filing. This allows you to obtain some feedback on potential concerns that the DOI may have on the proposed rates and forms, but this is not a comprehensive review, and you may often run into DOI objections during the filing review process that could have been avoided with additional insight on the state’s requirements. Adding an expert review of filings prepared by your company is a “must have” to achieve timely approvals in key states.

Below we provide greater details on the benefits achieved through an expert review of your filings by an actuarial and insurance consulting firm with extensive state filings experience.

Benefit #1: Increase the likelihood of proposed rates and forms being approved

It is not unusual for companies to receive filing objections from state DOIs that request changes to the company’s proposed rates and forms. If a company does not have a full understanding of the options that will satisfy the DOI’s concerns, it may make undesired revisions to the product in response to an objection.

Our actuarial consultants worked recently on a management liability filing in California that used range for rates and rating factor. The DOI had concerns about the subjectivity of the ranges, which may lead a company to eliminate the ranges and use specific rates/factors. Our actuarial consultants were able to assist the company in providing a solution that kept the ranges and was acceptable to the California DOI.

Whether it is to ensure a company obtains its proposed rate change or to recommend changes to the company’s rating plan to achieve the company’s goals, a review by an actuarial consultant and an insurance product development expert can have a positive impact on a company’s bottom line.

Benefit #2: Ensure filing complies with DOI requirements

While each state has laws, often there are DOI positions and interpretations, which are not published, and companies learn about them after the filing and during the DOI’s review. Not knowing this type of information could negatively impact a company’s filing. For example, New York disapproves filings without the opportunity for the company to respond when filings are substantially out of compliance with state requirements. During 2021, the New York Department of Financial Services disapproved 19% of submitted filings and another 8% of filings were withdrawn. New York is not the only state that takes this approach.

The Florida Office of Insurance Regulation is often known for disapproving commercial lines form filings that are not compliant with the state requirements. For auto policies (both personal and commercial), New York has unique coverage requirements that must be reflected on the declarations page. Even if a company uses a bureau template, a state-specific version is generally needed to avoid a series of objections pertaining to the format and contents of the declarations page.

Having an expert review from an actuarial and insurance consulting firm with regulatory compliance services can help companies avoid the dreaded disapproval letter.

Benefit #3: Identify potential DOI objections

While obtaining filing approvals without any DOI objections is unlikely in some states, the ability to identify potential objections will allow companies to address concerns prior to submitting the filing. Not only does this reduce the number of objections received during the state filing review process, but it also provides companies the opportunity to address items that may lack the appropriate support or may raise additional questions from the DOI.

By having an expert review, the company can identify potential objections and either address them upfront or be prepared for them. Many companies are surprised when they receive objections on California filings questioning items that were previously approved in a prior filing and are not being revised in the current filing. For rate and rule filings, the California DOI requires a complete manual with each filing and will review the entire manual – not just the proposed changes.

Benefit #4: Improve relationship with the DOIs

Although DOIs will review each filing independently, the DOIs will remember companies that consistently submit filings not in compliance or lack appropriate support. For frequent violators, the DOIs may outright disapprove the filing without sending an objection letter. The DOIs share information within its various operational areas as well as with other DOIs. This information can often lead to a market conduct inquiry, especially if the concern is related to noncompliance or may have an impact on the consumer. When a company submits a complete and compliant filing, the return on investment may lead to a quicker review by the DOI.

With many of the DOIs experiencing staffing shortages, any assistance companies provide to reduce the time that the DOIs spend on reviewing filings will be appreciated by the state.

Benefit #5: Reduce the time to approval

When companies are submitting rate filings, the premium impact of the changes could be in the millions, so reducing the time to approval could have a significant impact on the company’s bottom line. In 2022, the average time to approval for California on a rate filing is 337 days (median: 264 days) and a new program filing is 207 days (median: 209 days).

When companies have their filings reviewed by actuarial consultants and state filings experts, it allows submission of a more compliant filing with the proper supporting information and may result in the filing being approved quicker. Another benefit of engaging these experts is that they could help companies navigate filings through the DOI in the most efficient manner possible.

Need an expert review of your filings?

Perr&Knight is a leading provider of actuarial, product design and state filing services to insurers. Our actuarial consultants, product design consultants and state filings experts are very familiar with all the filing requirements in each state – especially the states where insurers struggle the most.

Please contact us if you need an expert filing review.

P&C Carriers: A Strategy for Entering the A&H Market

by Susan Cornett

By Susan Cornett, FMLI, AIRC, CFE

P&C insurance carriers recognize the opportunity to expand product lines and increase revenue by expanding into Accident & Health products. However, the differences between P&C and A&H product development are significant and what applies to P&C may not apply to A&H from a regulatory standpoint. Understanding those differences will allow P&C carriers to enter the A&H market with faster speed-to-market along with high-quality products.

During decades of providing insurance product development and actuarial support for insurance companies across the US, Perr&Knight has zeroed in on a low-risk A&H entry product for P&C: blanket accident policies.

Why develop a blanket accident policy?

Commercial entities, schools, universities, and other organizations often need supplemental blanket A&H policies to fill gaps in medical coverage to further support their staff or students. With fewer mandated benefits, these policies are the perfect starting place for P&C companies looking to break into the A&H market and provide additional coverage options to existing clients. Blanket Accident policies also fit nicely with General Liability policies and allow brokers/agents to offer comprehensive insurance protection from a single carrier.

Differences between P&C and A&H product development

Established P&C carriers may think they have the requisite experience to develop A&H coverages. However, a few significant differences between these two types of insurance product development are worth noting.

Rate support: Rate support requirements in A&H are different than P&C, usually requiring an actuarial memorandum describing the benefit in the rate structure as well as a signed certification attesting that the rates are reasonable in relation to benefits.
Forms and rates standards: On the P&C side, rates tend to receive more scrutiny. On the A&H side, regulators examine policy forms more closely. Though some states are outliers, we find this is a reliable trend.
Bureau forms: Many P&C carriers adopt ISO or other bureau forms as part of their P&C portfolio. For most lines, A&H doesn’t have this option. Most insurers rely upon proprietary forms.
Statistical reporting: Data reporting is important on the P&C side. But except for a few lines of business, statistical reporting requirements aren’t widespread on the A&H side. Besides ad hoc data calls, most supplemental A&H coverages don’t require such detailed stat reporting.
Rate certifications: Although a few states require certification of the rates or rate filings on the P&C side, some states require carriers to attest to their ability to meet target loss ratios for A&H lines.
Variable benefits: A&H policies typically rely on the use of variable language to allow inclusion or exclusion of benefits, terms and conditions. It’s not unusual for a blanket A&H policy to be 50+ pages because the benefits are included in the policy and not attached as optional endorsements. From an implementation perspective, this means programming one form with many options instead of 75 forms with no options — another way these policies diverge from P&C.
Verbiage differences: Terms and definitions vary between A&H and P&C. For example, P&C uses the phrase “loss costs” while A&H calls these “claim costs”. Unfamiliarity with terms could lead to filing errors.

Commonly asked questions

P&C carriers eager to enter A&H should know a few basic things before moving forward. Here are the most commonly asked questions from P&C insurers.

“Does our license cover A&H?” Short answer, maybe. P&C carriers may already have the ability to write A&H lines of business depending on what is included in their Certificate of Authority. Licensing requirements vary by state. Our licensing experts can help determine whether anything additional is needed. There are important differences in insurance product development and approvals, even for supplemental health policies, so P&C carriers should proceed with caution even if currently licensed to write the business.

“Can we offer blanket A&H on a non-admitted basis?” Simply, no. In the world of A&H, the concept of surplus lines is virtually non-existent. Companies may develop an A&H program thinking it will be available under surplus coverage guidelines, but state export lists rarely include any A&H coverage. The consequences for non-compliance can be steep and may jeopardize a company’s good reputation with state regulators.

“Can we ‘me too’ our A&H policy development?” Unlike P&C, “me too”-ing rating information from competitors’ existing programs is generally not acceptable. Different requirements for rate filing and support are a prime example of a P&C process that has no transferable correlation to A&H.

Start with blanket accident, then expand

After developing a blanket accident policy, companies can easily expand into other supplemental health lines. After getting your feet wet with blanket accident, product lines such as hospital indemnity, critical illness, disability income insurance, and gap medical generally follow the same product development process.

Work with experts

Developing a blanket accident policy may seem straightforward on the surface, but there are lots of opportunities to fall into little-known traps. Partnering with experienced insurance product development partners like Perr&Knight can save P&C carriers from wasting time and money on mistakes.

With our deep experience providing insurance product development and actuarial support services for carriers across both P&C and A&H lines, our professionals act as the “decoder ring” between the two. Working with knowledgeable professionals helps insurance companies step into a new world with greater confidence and ease.

Ready to test the A&H waters with a blanket accident policy? Contact Perr&Knight for help.

How to Navigate California Personal Auto Rate Increases

by Dee Dee Mays

Personal auto writers in California have been abuzz with news of the recent rate increase approved for Allstate Northbrook Indemnity Company. This is the first rate increase approved by the California Department of Insurance (“CDI”) on any type of personal auto program since April 2020. There are many filings still pending. Here are insights on common questions our insurance filings support team hears from insurers:

How did Allstate get their filing approved so quickly?

That is the $165 million dollar question. The Allstate filing was submitted on June 30, 2022, well after many other filings that remain pending. Consumer Watchdog sent a letter to Commissioner Lara urging him to reject the filing, but does not appear to have submitted a formal petition to intervene. In October 2021, the Commissioner mentioned Allstate as one of three companies that needed to provide additional COVID-19 refunds to their policyholders. At this time, there is no publicly available information indicating that Allstate has issued any additional refunds subsequent to Commissioner Lara’s letter.

Allstate provided the following information on refunds to date in their approved filing:

In the final correspondence on the approved filing, that was submitted on the day before the filing was approved, Allstate confirmed that the next rate filing for their program in California would include the removal of their remaining affinity group rating program. This affinity group is for Specialized Professionals. Allstate’s approved manual includes a 4% discount for policies where the “named insured/applicant or spouse is a degreed professional in one of the following occupational groups: Education or Library Science, Science, Engineering, or Information Technology.” This “two-tiered system” was one of the concerns mentioned in the Consumer Watchdog letter.

Is it true that an increase greater than 6.9% requires a public hearing?

No. This is a common misconception. In fact, any filing can result in a public hearing, if a consumer group petitions to intervene and the Commissioner grants their request for a hearing. California Insurance Code 1861.05(c) includes the following [if] “the proposed rate adjustment exceeds 7% of the then applicable rate for personal lines or 15% for commercial lines … the commissioner must hold a hearing upon a timely request. “ In practice, consumer groups petition to intervene on filings with changes lower than 7% as well as higher.

There are currently 51 rate increase filings pending with the CDI. Of those, 5 have proposed increases of more than 7%.The oldest pending filing was submitted in October 2019.

If I have a rate change pending, can I revise it to propose a higher rate change?

Yes. This is similar to submitting a new filing and will result in the new change being added to a future public notice list, usually within two to three weeks after the change is submitted. The filing cannot be approved any earlier than the 46^th day after public notice, which gives a consumer time to petition to intervene on the filing. Progressive initially submitted their filing for a 6.9% rate increase on January 7, 2022. This change appeared on the January 21, 2022 public notice list. Progressive amended their filing on September 30, 2022 to propose a 19.3% increase. his change appeared on the October 14, 2022 public notice list. After no correspondence from the CDI since Progressive submitted the letter to waive the deemer date on March 9, 2022, the CDI issued an objection letter on November 3, 2022 with an November 18, 2022 due date.

What usually happens if a consumer chooses to intervene on a filing?

Hearings are fairly rare, even after a consumer group petitions to intervene. Typically, the CDI will allow the consumer group to be involved in the filing review process and provide their feedback on the filed change. The CDI will hold one or more meetings with the insurance company and the consumer group to discuss the support for the changes and encourage the insurance company and the consumer group to come to agreement on a change and avoid the hearing process. The consumer group will then submit their invoice for their costs that, if approved by the CDI, are paid by the insurance company. The amount of compensation paid to intervenors from 2003 to 2020 is available at http://www.insurance.ca.gov/01-consumers/150-other-prog/01-intervenor/report-on-intervenor-program.cfm.

This shows the following amounts paid in 2020:

What happened with the Wawanesa personal auto rate increase filing?

As we mentioned in an earlier blog post on the moratorium, Wawanesa Insurance Company chose to reactivate the deemer on their filing, thus triggering a hearing. Our insurance filings support experts have recently learned from a representative of the CDI that “The Hearing for this matter was taken off calendar and a stipulated settlement agreement is being reviewed.”

What should my company do if we need a rate increase in California?

We have provided some additional ideas in our earlier blog. For example, consider accompanying class plan and rule revisions to improve segmentation and underwriting and to alleviate common concerns from the CDI. Regardless of how you proceed, having an insurance filings support expert with years of experience preparing personal auto rate filings in California could improve the time to approval and potentially save a company a substantial amount of money. Whether it is preparing the actual rate filing or performing a review of a rate filing prepared by the company, an expert can provide guidance that will increase the chance of having the most successful filing. There are many hot-button topics that may come up during a review of the filing. An expert can make you aware of these to reduce the potential for surprises.

Perr&Knight is a leading provider of actuarial and state filing services to insurers in California. Our actuarial consulting team actively follows the California market and is very familiar with all the filing requirements in the state. We prepare and submit more California filings than any other company. Our actuarial consulting experience includes expert testimony on rate filings and providing guidance to industry associations.

Please contact us for any insurance filings support that is needed with your California insurance products.

A New Wave of Insurance Products – Protecting Digital Assets

by Kyle Hales

A little over 100 years ago the steel, oil & gas, and mining industries represented over half of the assets of the top 50 largest companies in the United States. Companies such as U.S. Steel, American Telephone & Telegraph (AT&T), Standard Oil, and Bethlehem Steel dominated the corporate world. What made these companies unique and valuable was that they were large manufacturing entities that owned hard assets such plants, machinery, inventory, storage facilities, phone lines, etc. These companies sought insurance coverage to protect these hard assets in the form of traditional insurance coverages such as commercial property, inland marine, machinery/equipment, etc.

Fast forward 50 years and industries such as technology, telecom, and film, along with oil & gas, now make up over 50 percent of the assets of the top 50 largest companies in the US. It’s also the first time companies in the medical industry have begun to make their way onto this list. Another shift takes place when the assets of these large companies start to become ‘softer’. Intellectual property begins to make its way onto the balance sheets of these larger firms. The film and medical industries were largely able to protect their assets through copyright and patent laws. Additionally, most telecom and technology firms still manufactured hard assets such as computers and phone lines. As such, the insurance industry remained largely unchanged in the coverages that were offered.

After the turn of the millennium, there is a significant change in the makeup of the top 50 list. The largest industries are now led by technology, financial services, and medical companies. Interestingly, the steel industry, which was by far the dominant industry in the early 1900s does not have a single company in the top 50. Now, five out of the top six firms are technology companies, but unlike their predecessors, today’s tech companies’ main assets include intellectual property such as software and data; otherwise known as digital assets. A digital asset is anything that is stored digitally and is uniquely identifiable that organizations can use to realize value. Examples of digital assets include consumer data, documents, audio, videos, logos, slide presentations, spreadsheets, and websites.

Unfortunately, the insurance industry hasn’t caught up with the ever-changing landscape of protecting companies’ digital assets. Crime coverage protects assets that are held by a custodian or investor, while cyber insurance covers first-party losses and third-party liability associated with system failure events, network security, and data privacy. However, most of these policies do not cover the actual loss of data or access to the data. For companies looking for coverage in the emerging digital asset space, it can be challenging to find reasonable insurance capacity at affordable pricing.

At Perr&Knight, our insurance product development experts have designed, developed, and supported numerous products for unique and debutant industries. Our clients have received approvals and started writing numerous products in practically all states. We can assist with actuarial rate and rule development, as well as drafting and reviewing policy language. We also offer compliance services such as licensing and filing work. If you are thinking of expanding into offering a digital asset protection program, please contact us today to discuss your strategy.

The digital asset insurance world is still uncharted territory with a lot of work to be done. However, if you take your time and proceed carefully, you’ll be in the best position to break in early to this market opportunity. Refer to our “From Concept to Reality” brochure for tips on navigating the successful launch of your new insurance products.

Source: https://www.forbes.com/sites/jeffkauflin/2017/09/19/americas-top-50-companies-1917-2017/?sh=2ae1292e1629

Guidelines for Filing Program Business

by Michael Covert

Insurance carriers have become more and more interested in writing “program” business over the recent years. In addition, many carriers only have a single carrier to work with, at least at the onset. Every carrier writing program business wants to have as much flexibility as possible to continue to add new programs and program administrators. Based on the experience of our actuarial consulting and state filings experts with various Departments of Insurance (“DOIs”) across the majority of lines, we describe below the most efficient way to set up nationwide filings and minimize the possibility of material compliance concerns.

What is program business?

According to the Target Markets Program Administrators Association, Program Business is defined as insurance products targeted to a niche market or class, generally representing a book of similar risks placed with one carrier. The administration of the program is done through Program Specialists, often referred to as program administrators or managing general agents (“MGAs”), who have developed expertise in that market or class. Although administrative responsibilities are negotiated between the Program Specialist and carrier, the responsibilities of the Program Specialist include underwriting selection, binding, issuing, billing, and oftentimes marketing, premium collections, data gathering, and claims management/loss control.

Bureau “Base” Program Filings

For the standard commercial lines, program business typically uses Insurance Services Office (“ISO”) or other rating bureaus for loss cost/rates, rules, and forms, but program business can be more than the standard commercial lines and can span across almost all Property & Casualty lines of business.

Some carriers choose to set up a “Base” program (usually for commercial lines) that any program administrator can use. For example, a Base program, such as commercial general liability, might adopt all the bureau loss costs, rules, and forms. There is no need to make a filing that is specific to a single program administrator or target market/class of business. This gives the program administrator the ability to start writing immediately rather than waiting for program filings to be prepared, submitted, and approved for their specific program.

According to our actuarial consulting experts, the Base program generally has rating flexibilities such as multi-tiering and a schedule rating plan, so the carrier can appropriately price the various markets and classes of business written by the carrier’s program administrators. If there are specific rates and forms that are required for a target market or class of business, the carrier will prepare and submit filings for these program-specific rates and forms. Generally, these are miscellaneous items that can be added on to the Base program and are simpler / quicker from a state filings standpoint compared to one with a complete program.

One of the drawbacks of the Base program filing approach is that changes have the potential to impact all program business. If a carrier is adopting an ISO loss cost change, one of their program administrators may not want to adopt the loss cost because of the impact on their specific niche market. Under this scenario, the carrier may file an exception in the Base program and carve out this specific market by having independent loss cost or rates for the impacted class of business. For the Base program approach, every time the carrier is filing a change to the Base program, they need to assess the impact on all their program business.

Program Business Filings

Rather than have all the program administrators use the same Base program filing, a carrier may elect to file each program separately. If a carrier chooses to also file a Base program, the program business filings are typically underneath the main Base program. This means that eligible risks are written in the program business filings and other risk are written in the Base program. The program business filings and the Base program filing are independent of each other in terms of bureau loss cost, rules, forms and company exceptions. When carriers have program business filings, they generally give the program business filing a special program name, like “Small Contractors Program”, with distinct eligibility guides to distinguish it from other programs the carrier may already have in place.

Under the program business filing approach, new program filings (rates, rules and forms) are needed for each new program administrator and it takes longer to get the program to market. However, our actuarial consulting experts have stated that structuring it this way makes the process much cleaner for rate revisions and program changes as no program filing is connected in any way to another under the same line of business.

Having your program filings connected to the Base program, although it can be done, generally causes issues. First off, many DOIs do not permit references (or links) to another program which makes tracking of these “links”, and lack thereof, difficult from a compliance perspective. In addition, if you make a change to the Base program, it could impact all linked programs which could potentially result in the same drawback mentioned for Base program and the change may not be desired by all program administrators.

Concerns with overlapping programs

Based on the experience of our actuarial consulting experts, multiple states have issues with a single carrier having multiple programs under the same line of business that could potentially offer the same insured different premiums for the exact same coverage. Many times the argument is made that these “programs” are independently run by separate management teams, so there is no insurance offering to the same insured by the same individuals. This argument does not always work and is problematic in California along with some other states. In addition, there are some states, such as California, that take this one step further in that no program can overlap within an entire insurance group, not just the individual carrier. When writing multiple programs for the same line of business under a single carrier, there are typically a few ways to differentiate programs in order to not run into state filing issues, which include the below.

Mutually exclusive underwriting guidelines

You are permitted to have multiples programs in all states if the underwriting guidelines are mutually exclusive, meaning no exposure overlaps between any approved program. For example, you could have a long haul trucking commercial auto program and a public auto commercial program, or from a personal lines standpoint, you could have one program that requires a usage-based insurance (“UBI”) device connected to the vehicle that tracks mileage, speed, breaking, etc. which impacts the driver’s premium and a regular program that does not have a UBI device requirement.

Material mandatory coverage differences

Multiple programs with similar exposures may be allowed to the extent that the programs have material mandatory coverage differences. For example, you could have an HO-5 (Comprehensive Form) homeowners program and an HO-3 (Special Form) homeowners program, since an HO-5 program is meant to be more expensive because the policy form is much broader than the HO-3 policy form. Issues can arise if the HO-5 premium is lower than HO-3 for the same risk. Additionally, if an applicant is eligible for both programs, the carrier must make both programs available to the applicant.

Different Distribution channels

Carriers may use distribution channels to differentiate programs, which include commission-based programs written by independent or captive agents and direct programs, with no commission, which are often sold on the internet.

Multiple Carriers

If an insurance group has more than one admitted carrier, the same, or similar programs can be filed under each carrier with none of the above issues occurring, except in a few states, based on our state filings experience. As was mentioned above, there are some states that look at the entire insurance group, not just the carrier.

Workers Compensation Issues

This line of business is different than other lines. In most states, due to statutory or other requirements, carriers may only have one program and must offer the same rates to everyone for standard (guaranteed cost) business. Therefore, a carrier that might have multiple commercial auto programs under the same carrier, can only have one program for workers compensation. In some jurisdictions, carriers can file to enhance the bureau rating structure, vary the rates offered within their single program, and individually rate certain qualifying risks.

Do you need guidance on maximizing the number of programs you can write under a single carrier in your personal or commercial lines rating plans? Our actuarial consulting and state filings experts at Perr&Knight are here to help.