§ 4690. Licensing, operation, services, and activities of advisory or service organizations
(a) License required. No person or organization may provide any service listed in subsection (b) of this
section relating to any insurance subject to this chapter, and no insurer shall utilize
any service of such organization for such purposes, unless the organization has obtained
a license under subsection (d) of this section as an advisory or service organization.
(b) Authorized activities. Any licensed advisory or service organization may perform one or more of the following
activities on behalf of its affiliates:
(1) Collect, compile, and furnish loss data and related statistics concerning any type
of insurance subject to this chapter;
(2) Collect, compile, and furnish expense data concerning commercial risk insurance, workers’
compensation insurance, and employers’ liability insurance and, as approved by the
Commissioner, personal risk insurance;
(3) For commercial risk insurance, workers’ compensation insurance, employers’ liability
insurance, dwelling fire insurance, personal liability insurance, and inland marine
insurance, prepare, recommend, distribute, or file rates and pure premium rates, supplementary
rate, and supporting information, or pure premium rate data with or without adjustment
for loss development and loss trending, in accordance with its statistical plans where
applicable. Such pure premium rate data and adjustments should be in sufficient detail
so as to permit insurers to modify the pure premium rates based on their own rating
methods or interpretations of underlying data;
(4) For private passenger nonfleet automobile and homeowner’s insurance, recommend pure
premium rates and supply supplementary rate and supporting information or pure premium
rate data with or without adjustment for loss development and loss trending in sufficient
detail to permit insurers to modify the pure premium rates based upon their own rating
methods or interpretation of underlying data. The organization may not file any material
or data for or on behalf of insurers for private passenger nonfleet automobile and
homeowner’s insurance with the Commissioner, unless the Commissioner approves the
form of such material or data;
(5) Prepare and distribute manuals of rates and pure premium rates and rating rules and
rating schedules that provide for the development of rates or provide for the development
or calculation of rates with the addition of insurer information that is not ascertainable
within the distributed manuals;
(6) Advise about rate and pure premium rate questions; and provide supporting information
for the development and use of rates and pure premium rates;
(7) Prepare, recommend, and file policy forms and endorsements and consult with its affiliates
relative to their use and application;
(8) Prepare, recommend, or file coverages, classifications, and statistical plans;
(9) Distribute any and all information that is filed with the Commissioner and open to
public inspection;
(10) Conduct research and collect statistics in order to discover, identify, and classify
information relating to causes or prevention of losses;
(11) Make inspections, surveys, and audits;
(12) Conduct research and on-the-site inspections in order to prepare classifications of
public fire defenses;
(13) Provide actuarial, statistical, and administrative services to insurers and other
insurer-supported organizations;
(14) Collect, compile, and distribute past and current prices of individual insurers’ insurance
contracts, if such information is made available to the general public;
(15) Conduct research and collect information to determine the impact of benefit level
changes on rates and pure premium rates, and conduct research and report on other
projects;
(16) Prepare and distribute rules and rating values for experience rating plans. Calculate
and disseminate individual risk premium modifications;
(17) Assist an individual insurer to develop rates, supplementary rate information, or
supporting information when so authorized by the individual insurer; and
(18) Furnish any other services related to those enumerated in this subsection, as specified
in the organization’s license issued by the Commissioner.
(c) Availability of services. No advisory or service organization shall refuse to supply any service for which it
is licensed in this State to any insurer authorized to do business in this State and
offering to pay the fair and usual compensation for the service; nor shall such an
organization require the purchase of any specific service or services as a condition
to obtaining the service sought, provided that the furnishing of the requested service
does not otherwise place an unreasonable burden on the organization, except as prescribed
by the Commissioner for workers’ compensation and employers’ liability insurance.
(d) Licensing.
(1) Application. An advisory or service organization applying for a license shall include with its
application:
(A) a nonrefundable license fee of $1,000.00 payable to the Commissioner, except that
the fee shall be $100.00 for such an organization whose principal business office
is located in this State;
(B) a copy of its constitution, articles of association or incorporation, bylaws, and
any other rules or regulations governing the conduct of its business;
(C) a list of its affiliated insurers, together with disclosure of the services provided
to each; which list shall be maintained and updated and supplied to the Department
at least annually;
(D) the names and addresses of one or more residents of this State, or the designation
of the Secretary of State as a person, upon whom notices, process affecting it, or
orders of the Commissioner may be served;
(E) written documentation of its technical qualifications or abilities; and
(F) any other relevant information and documents that the Commissioner may require.
(2) Change in material circumstances. Every organization that has applied for a license pursuant to this subsection shall
promptly file with the Commissioner, not less than 10 days after the effective date,
every change in the material facts or in the documents on which its application and
license was based.
(3) Granting of license. If the Commissioner finds that the applicant and the natural persons through which
it acts are competent, trustworthy, and technically qualified or able to provide the
services proposed, and that all other requirements of law are met, the Commissioner
shall issue a license specifying the authorized activities of the applicant. The
Commissioner shall not issue a license to any organization whose activities would
tend to create a monopoly or to substantially lessen competition in any market segment.
(4) Duration. Licenses issued pursuant to this section shall remain in effect until the licensee
withdraws from the State or until the license is suspended or revoked by the Commissioner.
The Commissioner may at any time, after a hearing, revoke or suspend the license of
an advisory or service organization that does not comply with the requirements and
standards of this title. (Added 1983, No. 238 (Adj. Sess.), § 1; amended 1989, No. 128 (Adj. Sess.), § 5.)