What is the 'Bureau Rate'

Bureau rate refers to a standardized per-unit price for insurance published by a state insurance bureau. Traditionally, the rate was calculated by each bureau after collecting and analyzing rate data submitted by member insurance carriers in each state. Carriers were not required to adhere to these dates, but they could be instructive to companies and consumers. Bureau rate is a somewhat obsolete term; the rate has been replaced by industry-wide loss data published by each state to assist carriers in setting future rates. The rate data continues to be required among a long list of financial reports by each state for regulatory approval.

BREAKING DOWN 'Bureau Rate'

The bureau rate is one of many services historically provided by state insurance bureaus. It is also known as the manual rate, a reference to periodic manuals published by state regulators. Since then, both regulatory filings by insurance companies and publishing of industry data by states have largely moved to electronic formats. The National Association of Insurance Commissioners (NAIC) has developed an electronic data collection platform known as the System for Electronic Rates and Form Filing (SERFF).

The SERFF system allows the states to collect and study data from every carrier selling insurance in their state. It allows carriers to introduce new products for regulatory approval and compliance assurance. It also streamlines the filing process for both regulators and insurers by creating groups of states and carriers who can submit and review certain financial reports collectively. For instance, a lead state will often review a company’s reports on behalf of other regulatory bodies. The lead state is typically that which hosts the largest share of that company’s business.

Bureau Rates and Loss Costs

The SERFF collects carrier data via a series of electronic reports while other reports are delivered in physical form to the state regulator. Included among these reports are loss, or payout, reports that have largely replaced the publishing of bureau rates by state regulators. Each carrier provides their own loss cost summary. The state then summarizes state-wide losses, and individual carriers use this data to project future losses. They aggregate these projected losses along with other fixed non-claim costs to create their own rate structures.

An example of a loss report that many states require is the Reasonableness of Assumptions Certification for Implied Guaranteed Rate Method. This report looks at the carriers’ past projections of claim payouts based on the implied guaranteed rate method for setting aside future claim reserves.

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