insurance

Filed Rate

An insurance premium rate that has been officially submitted to and approved by state insurance regulators before it can be used. These rates must be adequate, not excessive, and not unfairly discriminatory according to state insurance laws.

Example

“The auto insurance company couldn't implement the new premium increase until it became a filed rate approved by the state insurance commissioner.”

Memory Tip

Think 'File Before Final' - rates must be filed with regulators before they become final and can be charged to customers.

Why It Matters

Filed rates protect consumers from excessive or discriminatory insurance pricing by ensuring state regulators review all rate changes before implementation. This regulatory oversight helps maintain fair and competitive insurance markets while ensuring companies remain financially stable enough to pay claims.

Common Misconception

Consumers often think insurance companies can change rates at will, but in most states, every rate change must go through a formal regulatory review process that can take months. Additionally, many believe that filed rates guarantee the lowest possible price, when actually they only ensure rates meet regulatory standards for adequacy and fairness.

In Practice

An auto insurance company wants to increase rates by 8% due to rising claim costs. They submit actuarial data supporting the increase to the state insurance department in March, pay a $5,000 filing fee, and wait for approval. After a 60-day review period, the state approves a 6% increase instead of the requested 8%. The company can only implement the 6% filed rate starting in June, affecting approximately 50,000 policyholders who will see their average premium increase from $1,200 to $1,272 annually.

Etymology

The term originated from the regulatory requirement that insurance companies must 'file' their proposed rates with state insurance departments for review and approval before implementation.

Common Misspellings

filed raetfield ratefiled ratefiled rt

Related Terms

Rate Filing

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