Porter 8 Rates

Question 1

Level of regulatory scrutiny for a LOB

Answer 1

• Low: sophisticated buyers, individual risks, thin data
• High: unsophisticated buyers, uniform risks, credible data, mandatory coverage, complex classification system, public interest & political awareness

Question 2

Political theory of regulation

Answer 2

regulatory scrutiny is higher when there is:
* voter interest (like PPA rates, which affect almost everyone)
* easy for policymakers to understand

Question 3

Rate Advisory Organizations

Answer 3

• Statistical agents collect & report loss experience & trends
• Rating bureaus prepare & submit rate filings on behalf of members

Provide:
* education of the public, industry, & regulators
* actuarial services
* filing support
* development of policy forms