How does flex rating law work?

How does flex rating law work?

• A. Insurers may adjust rates within a range without prior approval (correct)
• B. Rates must be filed and approved before use
• C. Rates are fixed for the policy term
• D. Rates cannot be changed during the policy term

Answer: (A)

Flex rating law lets an insurer adjust premiums within a preapproved range without needing prior regulator approval for each change. This speeds up pricing in response to changing costs, claims experience, or market conditions, while still keeping oversight because any move that would go outside that approved range would require filing and approval before use. Because of this, rates aren’t fixed for the policy term; they can be adjusted during the term as long as the change stays within the allowed band. If a change would exceed the approved range, it must go through the standard approval process.

Flex rating law lets an insurer adjust premiums within a preapproved range without needing prior regulator approval for each change. This speeds up pricing in response to changing costs, claims experience, or market conditions, while still keeping oversight because any move that would go outside that approved range would require filing and approval before use. Because of this, rates aren’t fixed for the policy term; they can be adjusted during the term as long as the change stays within the allowed band. If a change would exceed the approved range, it must go through the standard approval process.