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Homeowners' Insurance

The Homeowners' Insurance Rate Filing Instructions detail specific requirements unique to submitting a homeowners' insurance rate filing. Note that these revised instructions apply to all homeowners' insurance rate filings - i.e., all filings of NAIC type of insurance (TOI) 4.0. This includes the following sub-types of insurance (sub-TOIs):

  • 4.0000: Homeowners' Sub-TOI Combinations
  • 4.0001: Condominiums
  • 4.0002: Mobile Homes
  • 4.0003: Owner-Occupied Homes
  • 4.0004: Tenants
  • 4.0005: Other Homes

Rate filings received without complete information or with information missing from its requested places within the filing will be deemed incomplete pending submission of all required information. Filings will be disapproved if missing information is not submitted within 45 days.

For each of the following items, if the company has filed the item via SERFF after January 5, 2011, and the item has not changed since the time of its filing, the company may refer to the Nevada state tracking number and approval date of the relevant filing and state that nothing has changed. If any changes have occurred to the information in the following items, the company should describe the changes.

  • Credit Scoring Statement (See Item G below.)
  • Notice Explaining Premium Increases (See Item H below.)

Refer to Bulletin 10-010 for the filing of homeowners' insurance forms.

Any filing of rates for homeowners' insurance must be submitted to the Division with the following information.

All insurers are required to submit these filings electronically through SERFF.

  1. Cover letter and/or filing memorandum which summarizes the filing or a complete description within the "Filing Description" field in SERFF.
  2. Index of all exhibits and an explanation of their purpose.
  3. Balance of filing. See Nevada Bulletin 10-010 for additional requirements.
  4. Rate Disruption Analysis. Give the number of insureds receiving rate increases and decreases in 5% increments (e.g., 20 insureds will receive a 0%-5% increase, 30 insureds will receive a 5%-10% increase, etc.). Each 5%-change increment that contains at least one insured must be specifically identified. Include a category for insureds receiving an exact 0% change. Additionally, include the dollar amount of the largest increase and the characteristics of the insured who would receive that increase. Also include the largest percentage increase and the characteristics of the insured who would receive that increase. Identify the contribution of each component of the increase, including, but not limited to, the contribution of the amount of insurance, the protection class, the territory and the construction class. For each of these insureds receiving the largest impacts, identify the major reason(s) for the increase. If capping of rates is utilized, the company will need to include both the capped and uncapped premium. For group filings, provide a separate Rate Disruption for each company. For an acceptable way to provide this required information, the filer may fill out the Rate Disruption Excel template for each company encompassed within this filing. Creating a histogram to illustrate the rate disruption is encouraged.
  5. Provide a Profitability Report containing information pertaining to at least the past 5 years of Nevada experience only. For group filings, provide a separate report for each company and a combined total for all companies in the group. For each coverage form and for all coverage forms combined, the total experience for all years should be included after the presentation of experience by individual year. The report must state the valuation date of losses and define the experience period as ending month, date, and year in consideration of the most current data available. For detailed instructions and some example calculations, see a filled-out PDF example of a Home Insurance Profitability Report. NOTE: All figures in the example are hypothetical and are used for illustration purposes only. A filing company may utilize the structure of the Excel version of the example to generate its own Profitability Report using company-specific, Nevada-specific figures.
  6. Model Documentation. Per Bulletin 17-001, information required to be filed with the Division pursuant to NRS 686B.070(1) is “Supplementary rate information,” which is defined in NRS 686B.020(4) as including any “rating rule” or “rule of underwriting relating to rates.” By definition, any underwriting rule or model used in underwriting that affects the premium that any insured would pay is a “rule of underwriting relating to rates.” Calling a model an underwriting model rather than a rating model does not affect the applicability of this requirement. The Division requires insurers utilizing models in rating to provide the following documentation:
    Three Layers of Support
    • Layer 1: Raw Input Data:
    (I) The company should provide a list of the input variables that were used in the model.
    (II) The company needs to specify the timeframe to which the data apply.
    (III) The company needs to identify the jurisdictional scope of the data (state-specific, countrywide, etc.).
    (IV) The company needs to specify the books of business included in the model’s input data (private passenger automobile, home, etc., as well as specific companies).
    (V) If third-party data were used, the company should identify who the third party is and how customers can obtain and correct any errors that might be discovered in the data.
    (VI) If using the output of scoring algorithms, the company needs to provide full documentation of any scoring algorithm used, including sources, formulas, or a separate model used to generate the score.
    (VII) Underlying data for the model should include Earned Premium/Losses/Number of Policies.
    • Layer 2: Structure of Model:
    (I) The company should describe the type of model used (e.g., GLM, decision tree, GBM, etc.).
    (II)The company should provide a thorough discussion of the underlying assumptions and modeling methodology and the reasons for the approaches selected.
    (III) The company should include all mathematical formulas used as part of the model, including formulas for any distribution function(s), link function(s), and numerical parameters associated with any probability distribution.
    (IV) How did the company address the lack of credible data for any segments that had limited historical experience?
    • Layer 3: Model Outputs:
    (I) These are typically indicated relativities and confidence intervals, which should be compared/contrasted with the current and selected treatments in a side-by-side manner.
    (II) The company should provide an explanation for filed rating values that deviate from the indicated values and include additional support for any values that are above indications and fall outside of any confidence intervals. The additional support may be in the form of univariate analysis, loss-ratio analysis, or other similar detail that would support the deviation. Preferably, such support should be based on Nevada-specific data.
  7. Credit Scoring Statement. Answer all nine questions required within the Credit Scoring Statement instructions. The Credit Scoring Statement is not considered complete unless all of the requisite information is provided. If the company uses credit-based insurance scoring (CBIS) in any manner relating to this program, please provide the following:
    1. The name of the CBIS model being used and the name of the entity that developed the model;
    2. If the CBIS model has previously been filed by the company via SERFF during or after June 2009, the Nevada state tracking number and approval date of the SERFF filing in which the model was submitted;
    3. If the model has not been previously filed via SERFF or was filed prior to June 2009, a copy of the CBIS model and all relevant explanatory documentation (note that this also applies in cases where the model was previously submitted in a paper filing), which may be included in a confidential attachment if the entity that developed the model has not previously agreed to disclose the model algorithm publicly;
    4. A statement on the number of rating tiers and the approximate rating difference from one tier to the next;
    5. If any rating factors rely on both credit and non-credit variables, an explanation of what items besides credit are included and the manner in which these items are treated;
    6. If any score is considered unacceptable and will result in an initial refusal or nonrenewal, an explanation of the criteria on which such a decision would be made;
    7. For credit-based insurance scoring models, if the model is replacing an existing model, an explanation of why the new model is believed to be better than the current model that is being replaced, including an explanation of how the company arrived at this conclusion and any metrics used to support the conclusion;
    8. All adverse-action notices and reason codes, which must be provided in sufficiently clear and specific language so that a person can identify the basis for the insurer’s decision to take the adverse action, in compliance with NRS 686A.710;
    9. A percentage distribution of all scorable insureds and demonstrate that No Hit/No Score assignments are no more adverse than the 50th percentile of scorable insureds.
    If a complete Credit Scoring Statement addressing all nine of the elements above has previously been filed within SERFF after July 1, 2010, and has not changed since the time of its filing, the company may refer to the Nevada state tracking number and approval date of the relevant filing and state that nothing has changed. If any changes have occurred to the information in the above nine items, the company should describe the changes. Please note: A new filing of a credit-based insurance scoring model is required for any new adoption of that model by an insurance company within an insurance group or for a new line of business. References to credit-based insurance scoring models filed with affiliate insurers or for different lines of business will not suffice.
  8. Notice Explaining Premium Increases. Notice sent to insureds pursuant to NAC 690B.405 explaining the manner in which the rating plan provides for an increase in premium based on claims. At the minimum, this notice should include the items outlined in this example. The notice should include specific quantitative information and/or a thorough qualitative description regarding how claims may impact homeowners' insurance premium.
  9. Coverage A (Dwelling Coverage) Exhibits. Fill out these exhibits pertaining to the company's treatment of insureds' Coverage A (Dwelling Coverage) limits. Note that these exhibits do not apply to insurance for tenants/renters.
  10. If the company is writing insurance for mobile homeowners (NAIC sub-TOI 4.0002), the company should confirm compliance with NRS 691A.020, which requires the company to offer insurance to pay the replacement cost of the mobile home in the event of a total loss of the mobile home. The company should give the name of the policy form or endorsement where such insurance is made available.
  11. Other Exhibits. Exhibits should include, but are not limited to, actuarial models utilized; models of credibility; development of trend factors, relativities, loss development triangles, loss development factors, permissible loss ratios, indications, etc. Complex scoring algorithms may be filed confidentially, but all other supporting information – including any treatments that comprise the filed rating algorithm – is required to be publicly disclosed pursuant to NRS 686B.080(1). Complex scoring algorithms may include credit-based insurance scoring models, catastrophe models, or sophisticated location-based models, but do not include broadly used rating variables or the results of conventional or widely utilized rating techniques. Mere differences among insurers in the segmentation of commonly used rating characteristics, or in the complexity of such segmentation, do not confer confidential status on any element used directly within a rating algorithm.
  12. Underwriting Manual. Each company must submit a complete copy of its current underwriting manual if any of the rules in that manual pertain to rating in any manner, including tiering or decisions regarding company placement if multiple affiliated companies charge different premiums to similarly situated insureds.
  13. The Company Rate Information section of the Rate/Rule Schedule within SERFF should be filled out for every homeowners' insurance rate filing which is not a new program filing, even if the overall rate change due to the filing is 0%.
  14. If you have any questions or concerns with regard to the rate filing instructions, please call the Division's Property and Casualty Section at (775) 687-0773.

NOTE: These instructions represent the minimum requirements by the Division for a rate filing. Many companies currently provide more detail in several of the required exhibits, and the Division would like this to continue. The Division urges companies that are not sure about a particular form or exhibit to call for more explicit instructions.

Recommendations to Expedite Filing Review

In addition to the Property and Casualty Section's filing requirements, there are measures that insurers can take to structure a filing so as to increase the speed of its review and reduce the need for reviewers to ask clarification questions and make requests of a clerical nature. These measures include the following:

  1. Submit searchable PDF files in SERFF. Do not submit scanned PDF documents where individual words and phrases cannot be located via a search function.
  2. Give names and page numbers to all exhibits created by the company. This allows for fast, easy referencing of these exhibits in filing correspondence.
  3. DYA. YWBAQIYDN.*
    * Define your acronyms. You will be asked questions if you do not.
  4. If information within a form or a rate/rule manual is changing, it is recommended that the company provide a red-lined version of the form or manual and/or a side-by-side comparison of the current and proposed versions of each document. This enables reviewers to focus on the aspects of the documents that the company intends to change as a result of the filing.
  5. Any exhibits showing relativities derived on the basis of loss ratios, pure premium, or similar figures should also show the underlying loss/premium and/or frequency/severity figures that led to the derivation of the relativities. If the company can provide figures derived from direct empirical observation (e.g., actual written and earned premium, actual reported and paid losses, actual numbers of exposures and claims), this lends additional credence to the exhibits in which such figures are employed as part of actuarial techniques used to arrive at the company's rate recommendation.
  6. Any figures which were derived via multivariate analysis should be accompanied by an explanation of the multivariate technique(s) used. This may include, but is not limited to, the name(s) of the technique(s), the underlying formulas, a description of the steps involved, and a discussion of the intended effects of the technique(s).
  7. Where feasible, provide the underlying formulas used in the calculation or derivation of various exhibit columns.
  8. The company should double-check all calculations in the filing for accuracy. Also, if the same figures are used in multiple exhibits, it is important that the figures reconcile with one another. An internally inconsistent filing will result in questions from the reviewer.
  9. The company should ensure that all filings are free from substantive typographical or grammatical errors that could result in misinterpretation of the intent behind any document in the filing.
  10. In filing correspondence, providing specific answers for specific questions will expedite the resolution of Division staff's concerns.
  11. Companies with specific information technology (IT) or other deadlines may want to consider submitting their filings well in advance of such deadlines, to ensure sufficient time for addressing any concerns and requests regarding the filings. It would also be useful for such timelines to be mentioned within the initial filing documentation.
  12. When submitting revised or corrected documents, the company should ensure that the attachments being submitted actually incorporate the revisions.