Open Competition Law
Form of state rating legislation that allows each property/liability insurer to choose between using rates set by a bureau or its own rates. Individual states regulate insurers and approve their property insurance rates. There are three methods of rate approval in addition to open competition: prior approval rating, modified prior approval rating and file and use. At one time the insurance industry operated like a cartel, with rates set by bureaus and filed with the insurance commissioners of each state. Experts believed that competition would result in either unfairly high rates or unreasonably low rates that would lead to mass insurance company insolvencies. But open competition became widespread after New York State adopted it in 1969.
Popular Insurance Terms
Number of times losses occur, and their severity. These statistics measure expectation of loss, and are critical in establishing a basic premium or the pure cost of protection that is based ...
Organization that is part of a preferred provider organization (PPO) in which enrollees select an EPO provider to act as their primary care physician and serve as the gatekeeper. This ...
Same as term Contribution: principle of equity in property, casualty, and health insurance. When two or more policies apply to the loss, each policy pays its part of the loss, unless its ...
Group coverage for members of a fraternal association, usually on a nonprofit basis. ...
System of charges to an insured that fluctuates according to the loss experience of that insured. This is a form of experience rating. ...
Correction of a contract containing a mistake in order to prevent a party to that contract from gaining from that mistake. For example, if $1,000,000, instead of the correct amount of ...
Statute that makes it illegal in most states for an agent to rebate (return) any portion of his commission as an inducement for an applicant to purchase insurance from him. ...
Total amount of commissions and expense allowances paid by the reinsurer to its ceding company minus the total amount of reinsurance commissions and expense allowances that, in turn, its ...
Commission that is paid based on how profitable a particular type of business proves to be that is written by an agent. ...
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