                                 CODE OF VIRGINIA

RATE STANDARDS (§ 38.2-1904)

A. Rates for the classes of insurance to which this chapter applies shall not be
excessive, inadequate, or unfairly discriminatory. All rates and all changes and
amendments to rates to which this chapter applies for use in this Commonwealth
shall consider loss experience and other factors within Virginia if relevant and
actuarially sound, provided that other data, including countrywide, regional, or
other state data, may be considered where such data is relevant and where a
sound actuarial basis exists for considering data other than Virginia-specific
data.

   1. No rate shall be held to be excessive unless it is unreasonably high for
   the insurance provided and a reasonable degree of competition does not exist
   in the area with respect to the classification to which the rate applies.

   2. No rate shall be held inadequate unless it is unreasonably low for the
   insurance provided and (i) continued use of it would endanger solvency of the
   insurer or (ii) use of the rate by the insurer has or, if continued, will have
   the effect of destroying competition or creating a monopoly.

   3. No rate shall be unfairly discriminatory if a different rate is charged for
   the same coverage and the rate differential (i) is based on sound actuarial
   principles or (ii) is related to actual or reasonably anticipated experience.

B. 1.  In determining whether rates comply with the standards of subsection A,
separate consideration shall be given to (i) past and prospective loss
experience within and outside this Commonwealth, (ii) conflagration or
catastrophe hazards, (iii) a reasonable margin for underwriting profit and
contingencies, (iv) dividends, savings or unabsorbed premium deposits allowed or
returned by insurers to their policyholders, members or subscribers, (v) past
and prospective expenses both countrywide and those specifically applicable to
this Commonwealth, (vi) the loss reserving practices, standards and procedures
utilized by the insurer, (vii) investment income earned or realized by insurers
from their unearned premium and loss reserve and the Commission may give
separate consideration to investment income earned on surplus funds, and (viii)
all other relevant factors within and outside this Commonwealth. When actual
experience or data does not exist, the Commission may consider estimates.

   2. In the case of fire insurance rates, consideration shall be given to the
   experience of the fire insurance business during a period of not less than the
   most recent five-year period for which such experience is available.

   3. In the case of workers&#8217; compensation insurance rates for volunteer
   firefighters or volunteer emergency medical services personnel, the rates
   shall be calculated based upon the combined experience of both volunteer
   firefighters or volunteer emergency medical services personnel and paid
   firefighters or paid emergency medical services personnel, so that the
   resulting rate is the same for both volunteer and paid members, but in no
   event shall resulting premiums be less than $40 per year for any volunteer
   firefighter or volunteer emergency medical services personnel.

   4. In the case of uninsured motorist coverage required by subsection A of
   &#xA7; 38.2-2206, consideration shall be given to all sums distributed by the
   Commission from the Uninsured Motorists Fund in accordance with the provisions
   of Chapter 30 (&#xA7; 38.2-3000 et seq.).

C. For the classes of insurance to which this chapter applies, including
insurance against contingent, consequential and indirect losses as defined in
&#xA7; 38.2-133 (i) the systems of expense provisions included in the rates for
use by any insurer or group of insurers may differ from those of other insurers
or groups of insurers to reflect the requirements of the operating methods of
any such insurer or group for any class of insurance, or with respect to any
subdivision or combination of insurance for which separate expense provisions
are applicable, and (ii) risks may be grouped by classifications for the
establishment of rates and minimum premiums. Classification rates may be
modified to produce rates for individual risks in accordance with rating plans
that establish standards for measuring variations in hazards, expense
provisions, or both. The standards may measure any difference between risks that
can be demonstrated to have a probable effect upon losses or expenses.
Notwithstanding any other provision of this subsection, except as permitted by
&#xA7; 38.2-1908, each member of a rate service organization shall use the
uniform classification system, uniform experience rating plan, and uniform
statistical plan of its designated rate service organization in the provision of
insurance defined in &#xA7; 38.2-119.

D. No insurer shall use any information pertaining to any motor vehicle
conviction or accident to produce increased or surcharged rates above their
filed manual rates for individual risks for a period longer than 36 months. This
period shall begin no later than 12 months after the date of the conviction or
accident.

E. Each authorized insurer subject to the provisions of this chapter may file
with the Commission an expense reduction plan that permits variations in expense
provisions. Such filing may contain provisions permitting agents to reduce their
commission resulting in an appropriate reduction in premium. Nothing in this
section shall be construed to require an agent to reduce a commission, nor may
an insurer unreasonably refuse to reduce a premium due to a commission reduction
as permitted by its filed expense reduction plan.

HISTORY: 1973, c. 504, § 38.1-279.33; 1975, c. 155; 1977, c. 415; 1981, c. 243;
1982, c. 226; 1986, c. 562; 1987, c. 697; 1991, c. 104; 1993, c. 985; 1996, c.
250; 2002, c. 145; 2015, cc. 502, 503.