Utah State Legislature

            (1) Rates may not be excessive, inadequate, or unfairly discriminatory.

            (2) (a) Rates are not excessive if a reasonable degree of price competition exists at the consumer level with respect to the class of business to which they apply. In determining whether a reasonable degree of price competition exists, the commissioner shall consider:

            (i) relevant tests of workable competition pertaining to:

            (A) market structure;

            (B) market performance; and

            (C) market conduct; and

            (ii) the practical opportunities available to consumers in the market to:

            (A) acquire pricing and other consumer information; and

            (B) compare and obtain insurance from competing insurers.

            (b) The tests described in Subsection (2)(a) include:

            (i) the size and number of insurers actively engaged in the market and class of business;

            (ii) the market shares of insurers actively engaged in the market and changes in market shares;

            (iii) the existence of rate differentials in that class of business;

            (iv) ease of entry and latent competition of insurers capable of easy entry;

            (v) availability of consumer information concerning the product and sales outlets or other sales mechanisms; and

            (vi) efforts of insurers to provide consumer information.

            (c) If reasonable price competition does not exist, rates are excessive if:

            (i) rates are likely to produce a long-term profit that is unreasonably high in relation to the riskiness of the class of business; or

            (ii) expenses are unreasonably high in relation to the services rendered.

            (3) Rates are inadequate if:

            (a) they are clearly insufficient, when combined with the investment income attributable to them, to sustain the projected losses and expenses in the class of business to which they apply; and

            (b) the use of such rates has or, if continued, will have:

            (i) the effect of substantially lessening competition; or

            (ii) the tendency to create a monopoly in any market.

            (4) (a) A rate is unfairly discriminatory if price differentials fail to equitably reflect the differences in expected losses and expenses after allowing for practical limitations.

            (b) A rate is not unfairly discriminatory if it is averaged broadly among persons insured under a:

            (i) group, franchise, or blanket policy; or

            (ii) mass marketed plan.

Renumbered and Amended by Chapter 130, 1999 General Session